The Reserve Bank of India has imposed restrictions on the Punjab and Maharashtra Cooperative Bank for a period of six months. Following the restrictions, the bank cannot disburse any fresh loan or open a Fixed Deposit account. In added trouble for the customers, they can only withdraw an amount up to Rs 1000.
The restrictions were imposed on the bank by the RBI under Section 35A of the Banking Regulation Act, 1949.
RBI imposes restrictions on PMC Bank for 6 months, customers can withdraw up to Rs 1000 only, bank can't give new loans, take FDs
A notification released in this regard by the central bank reads, “According to the directions, depositors will be allowed to withdraw a sum not exceeding 1,000 (Rupees one thousand only) of the total balance in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI Directions.”
The notification further directs the bank to “not grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated September 23, 2019”.
It says that such functions can be carried out by the bank only after prior approval from the RBI.
The RBI has, however, clarified that the restrictions must not be “constructed as cancellation of banking license”. It said, “The bank will continue to undertake banking business with restrictions till further notice/instructions. The Reserve Bank may consider modifications of these directions depending upon circumstances.”
Joy Thomas, the Managing Director of the bank, wrote to the customers of the bank, assuring that all irregularities, which were reported to the RBI, would be rectified before the expiry of six months.
The statement by the bank MD reads, “I regret to inform you that your PMC Bank has been put under regulatory restriction under Section 35A of B.R. Act by RBI for a period of 6 months due to irregularities disclosed to RBI. As the M.D. of the Bank, I take the responsibility and assure all the depositors that these irregularities will be rectified before the expiry of 6 months. All efforts are made to remove the restrictions by rectifying the irregularities. I know it is a difficult time for all of you and any apology may not restore the pain you are undergoing. Please co-operate with us. We assure that we will definitely overcome this situation and stand strong.”