The Reserve Bank of India (RBI) has put limits on amount that can be withdrawn by depositors from the Mumbai-based Punjab and Maharashtra Cooperative Bank (PMC Bank). It is to be noted that the operational restriction was imposed on the PMC Bank for next six months starting September 23, 2019.
As per the RBI directions to PMC Bank, withdrawals have been capped at Rs 1,000 per account and the bank is not allowed to make any fresh loans. However, the restrictions on PMC Bank has led to the chaos outside its branches in the financial capital.
As the restrictions have been imposed, the PMC Bank will not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets without the prior approval in writing from the RBI.
In a notification, the RBI said, "The issue of the directions by the Reserve Bank should not, per se, be construed as cancellation of its banking licence. The bank will continue to undertake banking business with restrictions till further notice/instructions." “The restrictions will be in force for six months,” it added.
It is worth mentioning here that the RBI monitors banks' health and issues such directions in case of concerns over financial health of an institution. However, no reasons were specified by the central bank for its restrictions on PMC Bank.
According to PMC Bank's website, the lender was awarded the scheduled status in 2000 and has a presence in multiple states.
(With Inputs From PTI)