PMC Bank scam: RBI increases withdrawal limit to Rs 50,000 per account; over 78% of depositors covered

The Reserve Bank on Tuesday increased the withdrawal limits for depositors of the scam-hit Punjab and Maharashtra Cooperative Bank (PMC Bank) to Rs 50,000 from Rs 40,000 per account. This is the fourth time the regulator has increased the withdrawal limits since its clamped down on the bank on 23 September when it had capped it a low Rs 1,000 per customer which led to lot of distress and criticism.

#JustIn | @RBI to allow PMC Bank's 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 central bank says in a release pic.twitter.com/VVxvqZ5r0E

— CNBC-TV18 (@CNBCTV18Live) November 5, 2019

Earlier, on 14 October, the RBI had raised the withdrawal limits for depositors to Rs 40,000 from Rs 25,000 per account while on 3 October, it had hiked the withdrawal limits to Rs 25,000 from Rs 10,000 per account. Since then PMC, which has among the top 10 cooperative banks with a deposit of over Rs 11,600 crore, is under an administrator appointed by the RBI the past management is being probed by the economic offences wing of the city police. “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,” RBI said in a statement. [caption id=“attachment_7404161” align=“alignleft” width=“380”]  PMC Bank. PTI photo[/caption] With the above relaxation, over 78 percent of the depositors of the bank will be able to withdraw their entire account balance, the central bank said. The RBI has also been decided to allow the 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,” it added. The Reserve Bank is monitoring the position of the bank very closely and will continue to take necessary steps in the interest of depositors, it added. On 23 September, RBI had put regulatory restrictions on the bank after finding irregularities, and misreporting of loans given to real estate developer HDIL, with whom it has an exposure of a whopping 73 percent or Rs 6,500 crore of its total loan book of Rs 8,880 crore. The entire loan has been NPA for the past two-three years. The restriction included barring the bank from lending and accepting fresh deposits. It also superseded the board and the management of the bank and appointed an ex-RBI official as the administrator at the bank. The RBI had initially set the withdrawal limit of Rs 1,000 per account but it was later increased to Rs 10,000 per account on 26 September for six months. (With PTI inputs)