The Reserve Bank of India (RBI) has informed the Delhi High Court that restrictions were imposed on cash withdrawals from Punjab & Maharashtra Co-operative (PMC) Bank after its liquidity position and ability to repay were reviewed.
The RBI has imposed the restrictions after an alleged fraud involving ₹4,355 crore came to light. The preliminary inquiry has revealed that the bank had lent over 70% of its loans to Housing Development and Infrastructure Limited (HDIL).
The RBI filed the affidavit in response to a petition filed by social activist Bejon Kumar Misra for protection of the depositors.
The RBI said that after reviewing the bank’s liquidity position and ability to repay its depositors and to mitigate the hardship of the depositors, it had progressively enhanced the limit for withdrawals from ₹1,000 to ₹10,000, then to ₹25,000 and ₹40,000. Now, the limit is ₹50,000 with effect from November 5, 2019. “With the latest relaxation, 78% of the depositors will be able to withdraw their entire account balance,” the RBI said.
It said the withdrawal ceiling was being monitored vis-à-vis the bank’s evolving depositor and liquidity profiles, and further action might be taken in the best interest of depositors.
In his petition, Mr. Misra sought a direction to the government and the RBI to constitute a committee to look into the working of co-operative banks. He also sought guidelines to safeguard the money of the people deposited in co-operative banks. Mr. Misra also wanted a full insurance cover for the money deposited in co-operative banks, including nationalised banks.
