RBI quells rumours on banking system, says no need for depositors to panic

The Reserve Bank of India (RBI) on Tuesday sought to quell rumours in some locations about certain banks including cooperative banks, resulting in anxiety among the depositors.

"The RBI would like to assure the general public that the Indian banking system is safe and stable, and there is no need to panic on the basis of such rumours," it tweeted.

The rumours stemmed from some account holders of the Punjab and Maharashtra Cooperative Bank (PMC Bank) whose activities have been restricted by the central bank for six months.

The RBI has capped withdrawal at Rs 10,000 per account and asked the bank to not grant or renew any loans and advances, make any investment or incur any liability, including borrowal of funds and acceptance of fresh deposits.

The central bank says 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 has 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. An administrator has been appointed to take charge.

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.