PMC Bank case: RBI extends restrictions for 6 months; raises withdrawal limit to Rs 1 lakh

The Reserve Bank of India (RBI) on Friday extended its restriction on the crisis-hit Punjab and Maharashtra Co-operative Bank (PMC Bank) for another six months. The central bank also enhanced the withdrawal limit for the bank's depositors to Rs 1 lakh from Rs 50,000 earlier. In March, the RBI had extended the regulatory restrictions on PMC Bank by another three months till June 22, 2020.

With the relaxation in withdrawal limit, more than 84 per cent of the PMC Bank's depositors will be able to withdraw their entire account balance. The central bank has taken this move after reviewing 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, the RBI said.

Earlier in November 2019, the central bank had permitted the depositors of PMC Bank to withdraw up to Rs 50,000 of the total balance in their accounts.

Also Read: PMC Bank: RBI increases withdrawal limit to Rs 50,000 from Rs 40,000

In a statement, the central bank said it has been closely monitoring the situation and has been holding meeting 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, it said.

Also Read: CKP Co-operative Bank licence cancellation: RBI says 99.2% of depositors to get full repayment

Besides, the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges in resolution of the lender, RBI said.

"Accordingly, it is hereby notified for the information of the public that the validity of the aforesaid Directive dated September 23, 2019, as modified from time to time, has been extended for a further period of six months from June 23, 2020 to December 22, 2020 subject to review," RBI notified.

Also Read: 'No safety concern for deposits in any bank': RBI allays fears on banking sector

The RBI said that all other terms and conditions of the directives under reference will remain unchanged.

On 24 September 2019, the RBI had imposed restrictions on PMC Bank under Section 35A of the Banking Regulation Act. It had also superseded the board and the management of the bank and appointed an ex-RBI official as the administrator at the bank.

By Chitranjan Kumar