The Reserve Bank of India on Friday raised the withdrawal limit for depositors at the crisis-hit Punjab and Maharashtra Cooperative Bank (PMC Bank). Depositors will now be able to withdraw up to Rs 1 lakh, as against the existing threshold of Rs 50,000. The central bank also extended restrictions on PMC Bank by another six months, to December 23, 2020. PMC Bank's resolution process has been affected by the COVID 19-induced lockdown, the RBI said in a statement.
"Further, on a review of 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, it has also been decided to further enhance the limit for withdrawal to Rs 1,00,000 per depositor, inclusive of Rs 50,000 allowed earlier," the RBI said.
The relaxation in the withdrawal limit will enable 84 per cent of the bank's depositors to withdraw their entire account balance, the regulator further said.
The RBI had imposed restrictions on PMC Bank in September last year citing "major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various Off-site Surveillance reports".
Putting the co-operative bank under its lens, the Reserve Bank of India barred PMC Bank from renewing or granting any loans, or making investments without its prior approval.
The bank, over a long period of time, had given over Rs 6,500 crore in loans to real estate company HDIL, which was 73 per cent of its total advances. The loans turned sour with a shift in the fortunes of the now-bankrupt company.
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