RBI clarifies Rs 10,000 withdrawal limit for PMC Bank account holders not final
The Reserve bank of India (RBI) has clarified that its previous direction of raising the withdrawal limit for account holders in Punjab and Maharashtra Cooperative Bank is not final. On Thursday, RBI set the withdrawal limit to Rs 10,000 per account-holder raising it from Rs 1,000.
Speaking to India Today TV, a top official of RBI said that reports claiming that the depositors are stuck with the Rs 10,000 withdrawal limit for a period of six months are not true.
This effectively means that the deposits of the account holders have not been "frozen" beyond the Rs 10,000 limit for six months and RBI will dynamically keep reviewing the situation.
RBI has clarified that a certain set of directions for PMC Bank are for a period of six months and on the advice of the administrator the central bank, PMC will keep assessing the situation and modify the rules to help the depositors.
RBI took to Twitter to issue a warning for the public. An RBI official said, "The central bank's actions against the bank management and some operations from day one have been guided by the idea of protecting depositors' interests. The financial irregularities in the bank were seriously threatening the deposits made by the common man." He added that the relaxation has already remedied the situation for 60 per cent account holders as they had around Rs 10,000 as total deposits in their accounts.
WITHDRAWAL LIMIT CHANGE
In an attempt to give relief to thousands of panic-stricken depositors of PMC Bank who had been flocking the bank headquarters in Bhandup, in northeast Mumbai, the national regulator on Thursday announced a major relaxation.
On Thursday RBI decided to allow the depositors to withdraw a sum not exceeding Rs 10,000 and raised the limit from Rs 1,000. This amount includes Rs 1,000 if already withdrawn from the total balance held in every bank account.
The bank's latest "depositor and liquidity profile" shows that with this relaxation, more than 60 per cent of the depositors will be able to withdraw their entire account balance.
A senior RBI official told India Today TV, "However RBI said in a statement said that all other terms and conditions of the said directive shall remain unchanged."
PMC BANK PUT UNDER WATCH
Punjab and Maharashtra Cooperative Bank, a multi-state urban cooperative bank was placed under "Directions" (under sub-section (1) of Section 35A read with Section 56 of the Banking Regulation Act, 1949) with effect from close of business on September 23.
The senior official said that the central bank made the move "in the interest of depositor protection as PMC bank was found to have indulged in major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various offsite surveillance reports to RBI that came to the Reserve Bank's notice recently.
The Board of the PMC Bank was also superseded and RBI nominated an administrator for taking necessary steps in this regard.
The RBI said in a statement that the relaxation announced on Thursday has been granted with a view to reducing the hardship of the depositors and that it was closely monitoring the position and shall continue to take further steps as are necessary to safeguard interests of the depositors of the bank.
The PMC Bank which is among the top 10 cooperative banks in the country faced RBI action on September 23 following complaints of large-scale irregularities. The bank was founded in a small room in Mumbai in 1984 and today it has 137 branches in six states.
The restriction was to stay in place for a period of six months from the close of business of the bank on September 23, said RBI.
RBI had put restrictions on the amount depositors of the PMC Bank can withdraw from their accounts.
An RBI communique on September 23 had said, "According to the Directions, depositors will be allowed to withdraw a sum not exceeding Rs 1,000 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."
According to RBI's restrictions on the urban cooperative bank, PMC Bank will still not be able to grant or renew loans and advances, make investment, incur any liability including borrowing of funds and accepting fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations, without prior approval in writing from the central bank.