PMC Bank depositors can now withdraw Rs 10,000

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Updated: September 27, 2019 6:57:25 AM

On Monday, the central bank had imposed a six-month ban on withdrawals of over Rs 1,000 as well as all lending and deposit-taking activity at the Mumbai-based cooperative bank.

In its latest notification, RBI also said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various off-site surveillance reports to RBI.In its latest notification, RBI also said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various off-site surveillance reports to RBI.

The Reserve Bank of India (RBI) on Thursday raised the cash withdrawal limit for depositors of Punjab and Maharashtra Cooperative (PMC) Bank to Rs 10,000 in a move that it said will benefit over 60% of the depositors with the bank.

On Monday, the central bank had imposed a six-month ban on withdrawals of over Rs 1,000 as well as all lending and deposit-taking activity at the Mumbai-based cooperative bank.

In its latest notification, RBI also said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various off-site surveillance reports to RBI.

“Therefore, the Board of the bank has also been superseded under sub sections (1) and (2) of Section 36 AAA read with Section 56 of the Banking Regulation Act, 1949, and an Administrator has been appointed. The Administrator is taking necessary steps in this regard,” it said in a notification on its website.

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The new limit of Rs 10,000 will include the Rs 1,000 permitted earlier for those who have already made the withdrawal. The above relaxation has been granted with a view to reducing the hardship of the depositors, the central bank said.

“The Reserve Bank is closely monitoring the position and shall continue to take further steps as are necessary to safeguard the interest of the depositors of the bank,” it said.

PMC Bank has cancelled its annual general meeting (AGM), which was earlier scheduled to be held on September 28.

The crisis at PMC Bank is understood to have been precipitated by its exposure to realty firm Housing Development and Infrastructure (HDIL) going bad. Earlier this year, HDIL had been dragged to the insolvency tribunal by Bank of India (BoI) to recover its loans to the developer. HDIL had thereafter arrived at a settlement with BoI to stay out of the National Company Law Tribunal (NCLT).

According to documents sourced from the Registrar of Companies (RoC), HDIL made non-current investments worth Rs 47.50 lakh in PMC Bank during 2017-18. The company also has loans from the cooperative bank, which are secured against its fixed deposits with the bank, the documents showed. PMC Bank is understood to have not reported the deterioration in the asset quality of the HDIL account to the regulator.

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