PMC Bank: RBI Extends Restrictions For 6 Months, Doubles Withdrawal Limit

On Friday, the Reserve Bank of India (RBI) extended regulatory restrictions on the fraud-hit Punjab and Maharashtra Co-operative (PMC) Bank for another six months to 22 December 2020.

However, the withdrawal limit for the bank's depositors has been increased to Rs 1 lakh from the existing Rs 50,000. With this relaxation, more than 84 percent of the bank's depositors will be able to withdraw their entire account balance, said RBI.

Regulatory curbs were imposed on the Mumbai-based co-operative bank in September last year after the RBI found financial irregularities, and misreporting of loans given to real estate developer HDIL. RBI had found that PMC Bank had masked 44 problematic loan accounts, including of HDIL, by allegedly tampering with its core banking system, and the accounts were accessible only to limited staff members.

The central has said that it has been engaging with the stakeholders to explore the possibility of a resolution of the bank but "The process has been affected due to the lockdown on account of COVID 19 and the continuing uncertainty around the pandemic. Further, the extent of the negative net worth of the bank, and the legal processes involved in the recovery of bad debts also pose challenges/limitations in the resolution of the bank,"

"Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges/limitations in resolution of the bank," RBI said.