National Depositors’ Body Concerned Over PMC Curbs By RBI
An employee serves a customer inside a bank in India. (Photographer: Prashanth Vishwanathan/Bloomberg)

National Depositors’ Body Concerned Over PMC Curbs By RBI

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Following the Rs 1,000 withdrawal limit set by the Reserve Bank of India for the customers of the crippled Punjab & Maharashtra Cooperative Bank, the All-India Bank Depositors Association on Tuesday raised concerns over the protection of the interest of depositors.

Citing irregularities, including under-reporting of higher non-performing assets, RBI, early Tuesday placed the urban co-operative bank under operational restrictions such as not allowing it give fresh loans, accept fresh deposits and borrowing of funds, among others for six months. One of the major restrictions affecting customers is capping

Withdrawals at Rs 1,000 per customer during the six- month period. The curbs also include ATM transactions and online banking.

While welcoming the preventive measures adopted by the RBI to stop erosion of deposit-values within PMC Bank, the association said, "we continue to be seriously concerned about the protection of interest of bank depositors - the safety and security of their deposits within PMC and in general.

"What is at stake is their hard-earned money parked with the bank for regular household requirements, and in many cases even their lifetime savings," the association president Sunil Bhandare told PTI.

He said it is the senior citizens and the middle-class families, having low-risk appetite, deposits their money in cooperative banks, that offer a slightly higher interest rate, rather than in the equity markets or mutual funds.

He also called up on the RBI to relax its stringent limit on withdrawals at Rs 1,000 as such a move would help in restoring confidence of mass of bank depositors.

"Bank depositors must be allowed to withdraw up to Rs 1 lakh of their deposit money, as there is an insurance cover available up to this limit under the Deposit Insurance and Credit Guarantee Corporation," Bhandare suggested.

He also said the RBI should come out a detailed inspection and investigation, explaining the reasons why such sudden and stern action became necessary.

"Was it a solvency issue? Was it breach of regulation or supervisory exercise of RBI indicating that the affairs of the bank are not being managed in the best interest of the depositors?" he asked.

Bhandare also said the website of the bank, which is suspended, should be started again so that bank's customers can view their accounts. This will reduce the psychological distress to depositors, he added.

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