The Reserve Bank of India (RBI) raised the withdrawal limit from Punjab and Maharashtra Cooperative (PMC) Bank to Rs 1 lakh from Rs 50,000 but extended the moratorium on the bank for another six months.
- The moratorium was earlier imposed till June 23, 2020 will now be applicable until December 22, 2020.
- The decision has been taken after reviewing bank’s liquidity position, its ability to pay the depositors and to help depositors mitigate the difficulties faced during the prevailing COVID-19 situation.
- With this relaxation, over 84% of the bank’s depositors will be able to withdraw their entire account balance.
Background
PMC is under All-Inclusive Directions under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949 with effect from September 23, 2019. The restrictions have been placed due to the financial irregularities and fraudulent operations.
- RBI also superseded the board and the management of PMCbank and appointed an ex-RBI official JB Bhoria as the administrator at the bank.
Increased withdrawal limit for 4 other banks
The RBI also raised the withdrawal limit of four other banks on whom curbs had earlier been put in place, namely
- Kerala Mercantile Co-operative Bank Limited, Kozhikode, Kerala: The withdrawal limit increased to Rs 50000 from Rs 2000.With the above relaxation, more than 89% of the depositors of the bank will be able to withdraw their entire account balance.
- Hindu Cooperative Bank Limited, Pathankot, Punjab: The limit has been increased to Rs 50,000 from Rs 25,000.With the above relaxation, more than 79% of the depositors of the bank will be able to withdraw their entire account balance.
- Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru, Karnataka: The withdrawal limit increased to Rs 1,00,000 from Rs 35,000.With the above relaxation, more than 54% of the depositors of the bank will be able to withdraw their entire account balance.
- Youth Development Cooperative Bank Limited, Kolhapur, Maharashtra: The withdrawal limit per depositor under the existing directions is Rs 5000 which has now enhanced to Rs 20,000.With the above relaxation, more than 76% of the depositors of the bank will be able to withdraw their entire account balance.
It should be noted that the RBI has no powers to enforce reconstruction schemes for cooperative banks unlike “Yes Bank Ltd. Reconstruction Scheme, 2020”.Regulation of urban cooperative banks is divided between the RBI and the Registrar of Co-operative Societies (RCS), while for smaller co-operative banks it is divided between National Bank for Agriculture and Rural Development (Nabard) and RCS.
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Formation– 1 April 1935
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).
