The RBI on Friday announced that it would be extending the restrictions on the Punjab and Maharashtra Co-operative Bank (PMC) by another six months while increasing the amount of money depositors could withdraw to Rs 1 lakh.
PMC Bank had been flagged by the RBI in September 2019 for alleged financial irregularities of over Rs 4,355 crore, including hiding and misreporting of loans given to real estate developer HDIL.
The bank was slapped with a six month period of regulatory restrictions on activities like lending and accepting fresh deposits. This was extended by three months in March, with the latest restrictions due to expire on June 22.
Now, the latest extensions will ease only on December 22.
“Reserve Bank has been engaging with the stakeholders to explore the possibility of a resolution of the bank. However, 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 recovery of bad debts also pose challenges/limitations in resolution of the bank. Nevertheless, consultation with various stake-holders and authorities for resolution of the bank is continuing. It is, therefore, considered necessary to extend the aforesaid Directions for a further period of six months to take the process forward,” the RBI said in a release.
However, the withdrawal limit has been raised from Rs 50,000 to Rs 1 lakh. In April, the withdrawal limit from hiked to Rs 50,000 from Rs 25,000. Initially, following the RBI’s action, withdrawals were capped to just RS 1,000.
In November 2019, the RBI superseded the board of PMC Bank and appointed J.B. Bhoria, an ex-RBI official, as its administrator.
