In a bid to alleviate the problems being faced by the despondent depositors of the crisis-hit Punjab and Maharashtra Co-operative (PMC) Bank, the All India Bank Depositors' Association (AIBDA) has suggested to the Reserve Bank of India (RBI) an immediate action plan, including upping the deposit withdrawal cap to ₹1 lakh and creation of a special line of credit that can allow additional withdrawal up to ₹10 lakh for all eligible large depositors.

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The RBI needs to immediately raise the deposit withdrawal cap from ₹40,000 to ₹1 lakh well before the beginning of the upcoming Diwali festival even as it completes its inspection and investigation of the activities of PMC Bank, said Amitha Sehgal, honorary secretary, AIBDA.

Special line of credit

The Association has sought the creation of an exclusive line of credit from the Deposit Insurance and Credit Guarantee Corporation's (DICGC) huge funds surplus of ₹87,995 crore (as at March-end 2019). It is easily possible to offer such a unique line of at least ₹2,000-2,500 crore, which is less than three per cent of the Corporation's fund value.

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"This can surely cover withdrawal limit of an additional up to ₹10 lakh for all large eligible depositors of PMC Bank. This special line of credit can be redeemed progressively with a vigorous and rigorous recovery process by confiscating and selling the assets of HDIL and its promoters -- the perpetrators of the massive fraud (at PMC Bank)," said the Association in a statement.

The RBI needs to appraise and engage the anxious depositors of PMC Bank and stakeholders across the country, with a senior RBI official along with a member of the Bank's advisory committee specifically answering and dealing with issues and problems raised by the bank's depositors.

The Association has also suggested that the RBI's urban co-operative banks' department should create an immediate user-friendly helpline to answer depositors' queries on an ongoing basis to restore their confidence.

Underscoring that when banks open a customer's deposit account, it is in a way a contract between them and the depositors, AIBDA said banks could not hide behind the RBI sponsored DICGC to limit their liability only up to ₹1 lakh.

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Amitha observed that: "Indeed this deposit insurance cover, which was fixed way back in 1993, is extremely low in international comparison. Even considering the inflation factor of the last 28 years, deposit insurance cover should have been ₹5 lakh as of today."

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