RBI enhances PMC Bank withdrawal limit to Rs 50,000

Reserve Bank of India (RBI).

Mumbai, ¬†Following a review of the crisis-ridden Punjab and Maharashtra Cooperative Bank’s (PMC’s) liquidity position, the Reserve Bank of India (RBI) on Tuesday raised the withdrawal limit for bank depositors to Rs 50,000 from Rs 40,000 earlier.

This is the fourth time the central bank has increased the withdrawal limit after imposing the regulatory restrictions last month under the provisions of the Banking Regulation Act. With this relaxation, the RBI said, more than 78 per cent of the depositors of the bank will be able to withdraw their entire account balance.

The RBI had initially allowed depositors to withdraw a paltry Rs 1,000, followed by Rs 25,000 to Rs 40,000 and to Rs 50,000 on Tuesday but the customers have been demanding full access to all their accounts.

“The RBI, after reviewing the PMC’s liquidity position and its ability to pay its depositors, has decided to further enhance the limit for withdrawal to Rs 50,000, inclusive of Rs 40,000 allowed earlier,” an RBI statement said.

The RBI further said that it has decided to allow the depositors to withdraw within the prescribed limit of Rs 50,000 from the bank’s own ATMs and that this move will enable more than 78 per cent of the depositors of the bank to withdraw their entire account balance.

“The Reserve Bank is closely monitoring the position and shall continue to take further steps as are necessary to safeguard the interest of the depositors of the bank,” it added.

The PMC Bank crisis has claimed several lives till date and has resulted in high voltage protests in Mumbai. The scam broke after Housing Development and Infrastructure Limited (HDIL), a single borrower which accounted for 73 per cent of PMC’s loan book, went bankrupt. HDIL in collusion with PMC Bank executives created thousands of fake customer accounts to re-route funds to itself.