RBI has decided to further enhance the limit for withdrawal to Rs 1 lakh per depositor, inclusive of Rs 50,000 allowed earlier.
PMC Bank Latest News: The Reserve Bank of India (RBI) in 2019 had issued directions to the Punjab and Maharashtra Cooperative (PMC) Bank Limited, Mumbai, Maharashtra and had restricted unlimited withdrawals. The PMC bank, a Multi-State Urban Cooperative Bank was placed under All-Inclusive Directions under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949 with effect from close of business on September 23, 2019 in the interest of depositor protection. RBI, in its latest press release, has stated that the validity of the aforesaid Directive dated September 23, 2019, as modified from time to time, has been extended for a further period of six months from June 23, 2020 to December 22, 2020 subject to review.
Further, on a review of the bank’s liquidity position, its ability to pay the depositors and with a view to mitigating the difficulties of the depositors during the prevailing COVID-19 situation, it has also been decided to further enhance the limit for withdrawal to Rs 1,00,000 per depositor, inclusive of Rs 50,000 allowed earlier. With the above relaxation, more than 84% of the depositors of the bank will be able to withdraw their entire account balance.
The withdrawal limit under the directions was last enhanced to Rs 50,000 per depositor on November 5, 2019 and the Directions were last extended vide Directive dated March 21, 2020 up to June 22, 2020.
Reserve Bank has been engaging with the stakeholders to explore the possibility of a resolution of the bank. However, the process has been affected due to the lockdown on account of COVID 19 and the continuing uncertainty around the pandemic. Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges/limitations in resolution of the bank. Nevertheless, consultation with various stake-holders and authorities for resolution of the bank is continuing. RBI in its press release said that, therefore, it considered necessary to extend the aforesaid Directions for a further period of six months to take the process forward.