The Reserve Bank of India capped the withdrawals at Rs 1,000 per account and asked the bank to not grant or renew any loans and advances
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In a relief for Punjab and Maharashtra Cooperative (PMC) Bank customers, the Reserve Bank of India (RBI) on Thursday increased the withdrawal limit from Rs 1,000 to 10,000.
"The relaxation has been granted with a view to reducing the hardship of depositors. The RBI is closely monitoring the position and will continue to take further steps as are necessary to safeguard the interest of depositors," it said in a statement.
On Monday, the central bank had restricted activities of PMC Bank for six months. It capped the withdrawals at Rs 1,000 per account and asked the bank to not grant or renew any loans and advances, make any investment or incur any liability, including borrowal of funds and acceptance of fresh deposits.
The crackdown caused panic among depositors. However, the RBI said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong or under-reporting of its exposures under various off-site surveillance reports.
"Other terms and conditions of the directive will remain unchanged. With the above relaxation, more than 60 per cent of the bank depositors will be able to withdraw their entire account balance," it said in a statement.
The RBI has sacked the bank's board of directors under sub-sections 1 and 2 of section 36 AAA read with section 56 of the Banking Regulation Act 1949. An administrator has been appointed to take charge.
PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.
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