PMC Bank raises withdrawal limit for depositors to Rs 50,000

As angry depositors of Punjab and Maharashtra Cooperative (PMC) Bank took to streets on Tuesday in order to stage their protest, the Reserve Bank of India (RBI) enhanced the withdrawal limit to Rs 50,000.

On October 14, the central bank had permitted the depositors to withdraw up to Rs 40,000 of the total balance in their accounts.

"The RBI, after reviewing the bank's liquidity position and its ability to pay its depositors, has decided to further enhance the limit for withdrawal to Rs 50,000 inclusive of Rs 40,000 allowed earlier," it said in a statement.

"With the above relaxation, more than 78 per cent of the depositors will be able to withdraw their entire account balance."

The RBI also decided to allow depositors to withdraw from the bank's own ATMs within the prescribed limit of Rs 50,000. This is expected to ease the process of withdrawals.

"The RBI is closely monitoring the position and will continue to take further steps as are necessary to safeguard the interest of the depositors of the bank," it said.

In late September, the RBI had restricted activities of PMC Bank for six months and asked it not to grant or renew any loans and advances, make any investment or incur any liability, including borrowal of funds and acceptance of fresh deposits.

The directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong or under-reporting of its exposures under various off-site surveillance reports.

The RBI later sacked the bank's board of directors under sub-sections 1 and 2 of section 36 AAA read with section 56 of the Banking Regulation Act 1949. The bank is now under the charge of an administrator.

PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.