New Delhi: In a significant development, the Reserve Bank of India or RBI has put restrictions on the amount depositors of Mumbai-based Punjab and Maharashtra Cooperative Bank (PMC Bank) can withdraw from their accounts with the urban co-operative bank.
“According to the Directions, depositors will be allowed to withdraw a sum not exceeding Rs 1,000 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 RBI said.
The RBI, however said that the issue of the directions to PMC Bank should not be construed as cancellation of banking licence by the central bank. PMC Bank can continue to undertake banking business with restrictions till further notice/instructions from RBI. The Reserve Bank may consider modifications of these directions depending upon circumstances.
The restriction will remain in force for a period of six months from the close of business of the bank on September 23, said RBI. Further, according to the RBI’s restrictions on the urban cooperative bank, PMC 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 accept fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations, without prior approval in writing from the central bank.
The RBI statement further added that the bank will be restricted from entering into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets, except to the extent or in the manner notified under the RBI directions. The multi-state scheduled urban bank might make payments in respect to provident fund and gratuity under the circular dated September 23, but is not allowed to incur or extinguish liabilities without the RBI’s written approval. Investment in government-approved securities may be carried out by the bank, among other approved transactions under the directions.
The central bank said in a statement that the issue of directions is not to be construed as a cancellation of a banking licence. RBI has said that the directions are being issued in public interest under sub-section (1) of Section 35A and Section 56 applicable to co-operative societies of the said Act.