HomeBankingRBI puts curbs on PMC Bank, restricts withdrawal to Rs 1,000 per account; chaos at branches
RBI puts curbs on PMC Bank, restricts withdrawal to Rs 1,000 per account; chaos at branches
September 24, 2019
In a move that created panic among thousands of customers, the Reserve Bank of India (RBI) on Tuesday slapped restrictions on Punjab and Maharashtra Cooperative Bank Ltd (PMC Bank), a leading co-operative bank headquartered in Mumbai, for violation of various regulations.
In its directions to the bank, with a deposit base of Rs 11,617 crore, the central bank said depositors will be allowed to withdraw only Rs 1,000 of the total balance in every savings bank account or current account or any other deposit account. Hundreds of customers rushed to the PMC Bank branches across the state as soon as the RBI announcement came out. Chaos prevailed around the branches as customers were unable to withdraw more than Rs 1,000 from the bank.
The RBI said the bank will also not be able to 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 without prior approval in writing from the Reserve Bank.
The RBI has told the bank not to 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.
PMC Bank has 137 branches spread across seven states with 81 branches in Mumbai, Navi Mumbai, Thane and Palghar regions, 10 branches in Pune and 12 branches in rest of the state. The bank has 51,601 members. The bank reported total advances of Rs 8,383.33 crore as on March 31, 2019.
The RBI directions will remain in force for a period of six months from the close of business of the bank on September 23, 2019, it said.
According to the RBI, the issue of the directions by the Reserve Bank should not be construed as cancellation of banking licence by the RBI. “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,” the RBI said.
“The directions are imposed in exercise of under Section 35A of the Banking Regulation Act, 1949 read with Section 56 of the said Act,” the RBI said. However, the RBI did not disclose the specific lapses on the part of the bank.
Founded in 1984 by Gurcharan Singh Kochhar, the bank has a staff strength of 1814. The bank has reported a net profit of Rs 99.69 crore for the year ended March 2019 as against Rs 100.90 crore in March 2019. The bank also reported 3.76 per cent of advances as gross NPAs in March 2019.
The 14-member board of the bank is headed by S Waryam Singh.