RBI enhances PMC Bank withdrawal limit to Rs 1 lakh
The Reserve Bank of India (RBI) on Friday doubled the withdrawal limit for Punjab and Maharashtra Cooperative Bank’s depositors to Rs 100,000 from Rs 50,000 earlier.
With this relaxation, the RBI said that more than 84 per cent of the depositors of the bank will be able to withdraw their entire account balance.
“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,” the RBI said in a statement.
“… More than 84 per cent of the depositors of the bank will be able to withdraw their entire account balance.”
As per the statement, 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 upto June 22, 2020”.
Overall, this is the fifth time the central bank has increased the withdrawal limit after imposing the regulatory restrictions last year under the provisions of the Banking Regulation Act.
The RBI had initially allowed depositors to withdraw a paltry Rs 1,000, followed by Rs 25,000 to Rs 40,000 and to Rs 50,000.
According to the statement, the 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 or limitations in resolution of the bank,” the statement said.
“Nevertheless, consultation with various stake-holders and authorities for resolution of the bank is continuing. It is, therefore, considered necessary to extend the aforesaid Directions for a further period of six months to take the process forward.”
The PMC Bank scam broke after Housing Development and Infrastructure Ltd (HDIL), a single borrower which accounted for 73 per cent of PMC’s loan book, went bankrupt.
HDIL, in collusion with PMC Bank executives, created thousands of fake customer accounts to re-route funds to itself.