The Reserve Bank of India has imposed restrictions on a cooperative bank( PMC) with 137 branches across India, including limiting customer withdrawals to a total of 1,000 rupees per account for six months.
The Reserve Bank of India (RBI) announced on Sept. 24 that it has placed Mumbai-based Punjab and Maharashtra Cooperative Bank (PMC Bank) Ltd. under regulatory restrictions. The central bank wrote:
Depositors will be allowed to withdraw a sum not exceeding ₹ 1,000 (rupees one thousand only) of the total balance in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI directions.
Punjab and Maharashtra Cooperative Bank is also prohibited from a number of activities without prior approval in writing from the RBI. RBI further says :
The directions shall remain in force for a period of six months from the close of business of the bank on September 23, 2019.
The central bank noted, however, that the notice does not mean the cancellation of the Punjab and Maharashtra Cooperative Bank’s license. “The bank will continue to undertake banking business with restrictions till further notice/instructions,” the RBI explained, adding that it “may consider modifications of these directions depending upon circumstances.”
Joy Thomas, Managing Director of PMC Bank, clarified in a statement that the bank has been put under regulatory restrictions because of irregularities disclosed to the central bank. “All efforts are being made to remove the restrictions by rectifying the irregularities,” The Hindu conveyed. “As the M.D. of the bank, I take the responsibility and assure all the depositors that these irregularities will be rectified before the expiry of six months,” Thomas was quoted as saying.
PMC Bank currently has 137 branches located in Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. At the end of March, the bank had deposits and advances aggregating ₹11,617 crore (~$1.63 billion) and ₹8,383 crore (~$1.18 billion), respectively.
Yesterday on 26th September, The Reserve Bank of India increased the withdrawal limit for PMC depositors to ₹10,000 from ₹1,000 earlier and the new limit will allow 60% of the bank’s depositors to withdraw all of their money, according to the RBI.
In Box: At some locations, police personnel had to be deployed to control angry customers who had either queued up at the bank’s onsite ATMs to withdraw money or demanded to know the fate of their deposits. Cops waved the RBI circular at the customers, but they were in no mood to listen or disperse.
Some “feared they may be classified as loan defaulters, with lenders taking recovery action due to the non-execution of the ECS mandates or bouncing of post-dated PMC Bank cheques,” the publication added. One family told the news outlet that they hold about ₹22 lakh (~$30,962) with the bank, stating that “The management and RBI officials should have reached out to assuage customers’ concerns.
Experts says, unless RBI acts fast, confidence in coop banks is going to fall. RBI has not acted fast in the past.”