PMC Bank ordered to limit withdrawals, restrict activities for next 6 months by RBI
Chaos ensued at Punjab and Maharashtra Cooperative Bank (PMC Bank) branches on Tuesday morning after the Reserve Bank of India (RBI) restricted the bank’s activities for six months.
RBI has instructed PMC bank to not grant or renew any loans and advances, make any investment or incur any liability, including the borrowal of funds and acceptance of fresh deposits, during the six month period starting September 24.
“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,” the central bank said in a statement on Tuesday.
The issuance of RBI directions should not be construed as a cancellation of PMC Bank’s licence. The bank will continue to undertake banking business with restrictions till further notice, RBI said.
The directions are imposed in exercise of powers vested with the RBI under sub-section (1) of Section 35A of the Banking Regulation Act 1949 read with section 56 of the act. The RBI, however, did not specify any reasons for imposing the restrictions.
In a statement, the PMC Bank’s Managing Director (MD) Joy Thomas said the bank had been put under regulatory restrictions by the RBI owing to irregularities disclosed to the apex bank.
“As the MD of the Bank, I take full responsibility and assure all the depositors that these irregularities will be rectified before the expiry of six months,” Thomas told thousands of distressed customers.
The notices posted outside the bank’s branches, however, left many customers confused earlier today. Several viral messages on social media and WhatsApp, peddling fake information about the bank’s collapse only added to the chaos.
With large number of customers flocking to the bank’s branches in the morning, many of them downed shutters during regular working hours and local police had to be called in to prevent any escalation.
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 over 137 branches across India, it ranks among the top 10 cooperative banks in the country. As of March 31, 2019, the bank had deposits of Rs 11,617 crore and advances of Rs 8,383 crore.
In a nutshell, for the next 6 months, PMC Bank:
* Can only allow depositors to withdraw a maximum of Rs 1,000 per account
* Not grant or renew any loans and advances
* Not make any investment or incur any liability
* Not borrow funds or accept fresh deposits
* Not enter into any sell, transfer or otherwise dispose of any of its properties or assets
— The Indian Consumer (@TheIndianConsu1) September 24, 2019