PMC bank crisis: RBI clarifies ₹10,000 withdrawal restriction not final

The Reserve Bank of India (RBI) clarified on Friday that the withdrawal limit of ₹10,000 on the account holders of the Punjab and Maharashtra Co-operative Bank is not final, according to a report in India Today. The RBI had on Thursday raised the withdrawal limit to ₹10,000 from ₹1,000 on Thursday.

A top RBI official told India Today that reports about the PMC account holders being stuck with ₹10,000 withdrawal limit for next six month are not true. This reflects that the account holders money is not ‘frozen’ for six months and the RBI will continue reviewing and evaluating the situation.

Earlier, RBI had tweeted advising the people not to panic because of certain social media reports. An RBI official told India Today, “ The central bank's actions against the bank management and some operations from day one have been guided by the idea of protecting depositors' interests. The financial irregularities in the bank were seriously threatening the deposits made by the common man.”

On Thursday, it was revealed that according to the FY2019 balance sheet of the Reserve Bank of India Officers' Co-op Credit Society, the society has a ₹105 crore fixed deposit in PMC bank. And as many as twelve directors of the bank had a close association with the ruling BJP. The co-director of PMC bank Rajneet Singh is a member of the party too.

In an effort to give relief to thousands of PMC account holders, the RBI on Thursday raised the withdrawal limit from 1000 to 10,000 rupees.

On September 23, Punjab & Maharashtra Co-op Bank was directed by the RBI to curb withdrawal for six months as a result, many account holders were anxious as they will now be able to withdraw only ₹1000 for the next six months. The panic among the account holders increased and on September 26, RBI raised the withdrawal limit for the account holders.

India Today quoted a senior RBI official as saying, “in the interest of depositor protection as PMC bank was found to have indulged in major financial irregularities, failure of internal control and systems of the bank and wrong/under-reporting of its exposures under various offsite surveillance reports to RBI that came to the Reserve Bank's notice recently.

The PMC bank faced RBI action as many complaints about large-scale irregularities were reported. The bank is among the top ten cooperative banks of India.