The RBI also raised the withdrawal limit in the case of three other banks, namely, Kerala Mercantile Co-operative Bank Limited, Hindu Cooperative Bank Limited and Sri Guru Raghavendra Sahakara Bank Niyamitha.
The Reserve Bank of India (RBI) on June 19 raised withdrawal limit from fraud-ridden Punjab and Maharashtra Cooperative (PMC) Bank to Rs 1 lakh from Rs 50,000 while extending moratorium or restrictions imposed on the bank for another six months
The restrictions, which were earlier imposed till June 23, will now be applicable until December 22, 2020.
Limit of withdrawal for customers of three other banks has been raised by the RBI.
The central bank said that after a review of the bank's liquidity position, its ability to pay the depositors and to help depositors mitigate the difficulties faced during the prevailing COVID-19 situation, it has decided to raise the withdrawal limit to Rs 1 lakh per depositor. With this relaxation, over 84 percent of the bank's depositors will be able to withdraw their entire account balance.
"Reserve Bank has been engaging with the stakeholders to explore the possibility of a resolution of the bank. However, the process has been affected due to the lockdown on account of COVID 19 and the continuing uncertainty around the pandemic. Further, the extent of the negative net worth of the bank, and the legal processes involved in the recovery of bad debts also pose challenges/limitations in the resolution of the bank," the central bank said.
It added, "Nevertheless, consultation with various stakeholders and authorities for resolution of the bank is continuing. It is, therefore, considered necessary to extend the aforesaid Directions for a further period of six months to take the process forward."
On September 23, 2019, the RBI had placed curbs on the Mumbai-headquartered PMC Bank after identifying financial irregularities and fraudulent operations. The cooperative bank's board was superseded and an administrator was appointed.
The RBI circular had curbed the bank's functions like lending and withdrawals by customers. The move had sent customers of PMC Bank into a tizzy, with many flocking to branches of the bank and queuing up to withdraw their deposits.
The RBI also raised the withdrawal limit in the case of three other banks on whom curbs had earlier been put in place, namely Kerala Mercantile Co-operative Bank Limited, Hindu Cooperative Bank Limited and Sri Guru Raghavendra Sahakara Bank Niyamitha.
The withdrawal limit for depositors of the first two banks has been raised to Rs 50,000 and to Rs 1 lakh for those of the third one.(This copy has been updated with the latest release from the RBI)