Reserve Bank of India (RBI) has relaxed the withdrawal limit for account holders of beleaguered Punjab and Maharashtra Cooperative (PMC) Bank from Rs 1,000 to Rs 10,000 with immediate effect.
This comes after thousands of customers gathered at the bank’s branches in Mumbai for the third day on Thursday to protest against the RBI’s direction to impose restrictions on withdrawal amounts.
Some of them had said they would initiate legal action . Senior official sources told BusinessLine that the revised withdrawal amount will be communicated soon.
Related news:Depositors’ money is fully safe, says PMC MD
"Other terms and conditions of the said Directive shall remain unchanged. With the above relaxation, more than 60 per cent of the depositors of the Bank will be able to withdraw their entire account balance," RBI said in a statement.
"The above relaxation has been granted with a view to reducing the hardship of the depositors. The Reserve Bank is closely monitoring the position and shall continue to take further steps as are necessary to safeguard the interest of the depositors of the bank," it added.
RBI explained that the directions against the bank were necessitated on account of 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 to RBI that came to the Reserve Bank’s notice recently.
In earlier instances, RBI had relaxed the withdrawal amount but only after few months of the initial action.
Similar sanctions
The RBI has, in the past, imposed similar sanctions on other banks, especially co-operative banks. This month, it has extended such sanctions under Section 35 (A) for Osmanabad-based Vasantdada Nagari Sahakari Bank, Vithalrao Vikhe Patil Co-operative Bank in Nashik and Karad Janta Sahakari Bank.
In May this year, it had imposed financial curbs on Goa-based The Madgaum Urban Co-operative Bank and capped withdrawals by account holders at Rs 5,000. “The directions by the RBI are in public interest to ensure better governance and controls at these banks,” said a former banker who did not wish to be named.