Depositors will unable to withdraw over Rs 1,000 of their total savings or current account balance.
The Reserve Bank of India (RBI) has put Punjab and Maharashtra Cooperative Bank under directions for six months. This means a restriction on the bank's functions like lending and withdrawals by customers.
It is applicable from the close of business of the bank on September 23, 2019, subject to conditions laid down by the RBI in a circular.
Depositors will not be able to withdraw over Rs 1,000 of the total balance in any savings or current account or any other deposit account by whatever name called.
During this period, the co-operative bank will also be unable to grant or renew any loans and advances, make any investment or incur any liability including borrowing of funds and acceptance of fresh deposits. It will also be unable to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, as per the circular.
It added that the bank will be restricted from entering into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets, except to the extent or in the manner notified under the RBI directions.
The multi-state scheduled urban bank might make payments in respect to provident fund and gratuity under the circular dated September 23, but is not allowed to incur or extinguish liabilities without the RBI’s written approval. Investment in government-approved securities may be carried out by the bank, among other approved transactions under the directions.
The central bank said in a statement that the issue of directions is not to be construed as a cancellation of a banking licence.
RBI has said that the directions are being issued in public interest under sub-section (1) of Section 35A and Section 56 applicable to co-operative societies of the said Act.
PMC Bank customers took to Twitter to express their anguish over the situation. Many people posted videos and images of crowding outside the bank's branches.
— Surjeet Singh Rao (@raosurjeetsingh) September 24, 2019
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