PMC Bank Crisis: How you can withdraw more for special needs

The RBI has advised PMC bank officials to adopt a procedure for allowing withdrawal above the stipulated amount when there are cases of hardship.

Withdrawing amounts

 In case there is a medical emergency for self, spouse, children or parents, you need to submit the estimated expenses along with the concerned doctor’s certificate, medical reports and bills (for ongoing treatment) while applying for extra withdrawal.

Harshil Morjaria, a Mumbai-based certified financial planner of ValueCurve Financial Solutions says, “For medical emergencies, the bank should allow withdrawal as certain percentage of estimated medical expenses submitted that is authorized by the hospital. This Rs 1 lakh is insufficient for most medical treatments, with rising costs.”

Senior citizens can withdraw up to Rs 50,000 (higher than the Rs 40,000 for other depositors) for their sustenance. But such depositors must submit their age proof.  Widows too are permitted to withdraw up to Rs 50,000 and so are disabled depositors, after submitting their disability certificates. All such depositors must also submit their estimated monthly expenses.

Sapna Tiwari, Co-Founder and COO, Rupeewiz Investment Advisors says, “There is not much relief for senior citizens and disabled persons from this move since there is only a difference of Rs 10,000 between the maximum withdrawal limit and the amount they are now able to withdraw after submitting documents on grounds of hardship. They should also be allowed to withdraw Rs 1 lakh from deposits with the bank.”

The hardship payment of Rs 50,000 is also available for those who wish to pay school or college fees for their own selves or for their children. Make sure that you submit an estimated fee receipt, which has to be certified by the school or institute, to your bank branch.

In case there is a marriage in the family – of yourself, children, brothers or sisters – you need to submit the marriage invitation card, hall booking receipt, receipt for ornaments, etc. to your bank branch.

Should the deposit insurance cover be hiked?

The deposit insurance cover was last hiked in May 1993 to Rs 1 lakh from Rs 30,000 fixed in July 1980. A State Bank of India (SBI) research report dated October 7, 2019 says that the recent PMC Bank crisis has raised the question of deposit insurance in India.

Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India, says in a report that the deposit insurance coverage is very low. He says, when the insurance amount is seen as a percentage of per capita income vis-à-vis other countries, it is 0.7 per cent for India, but is 3.7 per cent for Australia, 4.4 per cent for the US and 7.4 per cent for Brazil. Given this backdrop, he says that there is a need to revisit the insurance coverage of bank deposits.