RBI Bans PMC Bank Operations, Withdrawal Restricted To Rs 1000 Per Account

TPI Staff September 24, 2019

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Mumbai: The Reserve Bank on Tuesday imposed an operational ban on Punjab and Maharashtra Cooperative Bank (PMC Bank), resulting in chaos outside its branches in the financial capital.

As per RBI instructions to PMC Bank, Rs 1,000 per account has been paid on withdrawals and the bank is not allowed to take any new loan.

The RBI monitors the health of banks and issues such instructions in case of concerns over the financial health of an institution. However, no reason was specified.

The RBI said in a notification, “The issuance of the guidelines by the Reserve Bank should be treated as the cancellation of its banking license. The bank will continue banking business with further restrictions/instructions.”

The RBI said that the ban would remain in force for six months.

Withdrawals have been capped at Rs 1,000 per account for all account holders.
The new directions by the Reserve Bank in connection with the PMC bank, which has a presence in multiple states are not an indication of the cancellation of its banking licence.
The bank cannot incur any liability including borrowing of funds and acceptance of fresh deposits or disburse any liabilities, without a nod from the apex bank.
The regulatory restrictions will be in force for the next six months.
The bank can renew any existing term deposit only on maturity and in the same name and same capacity only.
The RBI has allowed the bank to make investments only in government or SLR approved securities which mainly include cash and gold.
The Punjab and Maharashtra Co-operative Bank will not be allowed to make any fresh loans. It cannot grant or renew any loans and advances, nor can the bank make any investment, without the prior approval of the RBI.
If account holders have any liability towards the bank, the amount in their bank accounts will be first used to adjust the relevant borrowing account.

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