RBI Allows PMC Bank Customers To Withdraw Up To Rs 10,000

Two days after it placed strict restrictions on Punjab & Maharashtra Cooperative Bank, the Reserve Bank of India has eased withdrawal limits for the bank’s customers.

The central bank said today PMC Bank’s customers can withdraw up to Rs 10,000 during the six months in which the restrictions on the crisis-hit lender are expected to continue. The original restriction had allowed customers to withdraw up to Rs 1,000.

“The above relaxation has been granted with a view to reducing the hardship of the depositors,” the RBI said in a statement.

The banking regulator also said that with the easier withdrawal limit, more than 60 percent of PMC Bank’s customers will be able to withdraw their entire holding. The bank’s outstanding deposits were at over Rs 11,000 crore as on March 31, according to its annual report.

The RBI said it has superseded the bank’s board, invoking powers under the Banking Regulations Act. It has appointed an administrator to run the bank for now.

“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 that came to the Reserve Bank’s notice recently,” the banking regulator said.

PMC Bank’s Managing Director K Joy Thomas, who had been suspended on Sept. 24, told BloombergQuint in an interview yesterday that the restrictions on the cooperative bank were placed after certain accounts weren’t disclosed as non-performing assets. The RBI is currently conducting an inspection of the bank’s books, Thomas said.

He also said that customers needn’t worry about PMC Bank’s capability of paying back its depositors since it had been maintaining all regulatory liquidity ratios. The bank aims to come out of this stress before the RBI’s six-month period on restrictions ends, he said.