The Reserve Bank of India has enhanced the withdrawal limit for customers for the beleaguered Punjab & Maharashtra Co-operative Bank (PMC Bank) to Rs 40,000, a move the central bank said will allow 77 per cent of the bank’s customers to withdraw their entire account balance.
The RBI had earlier placed restrictions on the amount of money customers could withdraw from their PMC Bank accounts after unearthing a massive fraud that put significant question marks on the bank’s ability to pay its depositors.
The limit earlier was Rs 25,000 per account. The RBI on Monday said after reviewing the bank’s liquidity position and its ability to pay back its depositors, it has decided to enhance the withdrawal limit to Rs 40,000 per account.
With the new limit, the RBI said, around 77 per cent of the PMC Bank’s depositors will be able to withdraw their entire account balance. The RBI said it is continuing to monitor the developments at the bank and will “continue to take necessary steps in the interest of the depositors of the bank”.
The RBI imposed regulatory restrictions — including limits on how money could be withdrawn from each account — on the PMC Bank later September after it came to light that the bank had violated several regulations.
Among the violations was the PMC bank’s exposure to bankrupt real estate developer HDIL, which was around Rs 6,500 crore, a mindboggling 73 per cent of total its loan book of Rs 8,880 crore, as per the bank’s own admission.
As the investigation into the PMC Bank fraud gathered pace, it emerged that senior bank officials allegedly conspired to grant loans to HDIL long after the real estate developer had become bankrupt. The bank officials even hid the loans granted to HDIL in blatant violations of banking regulations.