PMC Bank crisis: RBI raises withdrawal limit to Rs 40,000

The Reserve Bank of India (RBI) has increased the cash withdrawal limit for depositors of Punjab and Maharashtra Cooperative (PMC) Bank to Rs 40,000, the regulator said in a statement on October 14. This includes the limit of Rs 25,000 allowed earlier.

With this relaxation, 77 percent of the depositors will be able to withdraw the entire account balance, RBI said. The regulator had increased the limit to Rs 25,000 from Rs 10,000 on October 3.

Also Read: Explained | PMC Bank crisis and why customers are panicking

The RBI had issued directions to PMC Bank on September 23, restricting basic banking services like cash withdrawals. Initially, the limit was set at Rs 1,000 per depositor. The regulator also appointed an administrator and three-member advisory committee to oversee the bank’s operations, after its board was superseded.

The multi-state cooperative bank came under fire for fraud and misreporting of bad loans. The lender was also found to have violated RBI’s group exposure norms. Its exposure to the realty firm Housing Development & Infrastructure (HDIL) is being investigated by the authorities including the Economic Offences Wing.

Forensic Auditors, appointed by the bank’s administrator, are also looking into the related transactions, the RBI said.

“The Reserve Bank is closely monitoring the developments and shall continue to take necessary steps in the interest of the depositors of the bank,” the regulator said.

Last week, Finance Minister Nirmala Sitharaman met with the bank’s customers on her visit to Mumbai. She said she has spoken to the RBI governor, who assured that customers' concerns will be taken on top priority. The central bank board that met in Chandigarh, also discussed the existing regulatory framework of cooperative banks, among other issues.