The Reserve Bank of India on Tuesday imposed restrictions on Punjab and Maharashtra Cooperative Bank, a Mumbai based urban cooperative bank. According to a direction issued on September 24, RBI said that the account holders will not be able to withdraw more than ₹1,000.
The bank will also not be allowed to grant or renew any loans, make any investment, sell any properties without prior approval of RBI. These restrictions will be in place for a period of six months.
The direction says, “Depositors will be allowed to withdraw a sum not exceeding ₹ 1,000 (Rupees one thousand only) 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. Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra without prior approval in writing from the Reserve 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 or otherwise, 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. The Directions shall remain in force for a period of six months from the close of business of the bank on September 23, 2019.”
But the RBI notification clarifies that this should not be taken as a cancellation of banking license of the bank. The bank will continue to undertake banking business with restrictions till further notice/instructions.
According to reports, the Punjab and Maharashtra Cooperative Bank had been put under regulatory restrictions by the RBI owing to irregularities disclosed to the apex bank. In a message sent to the shareholders, the bank’s Managing Director Joy Thomas said, “I regret to inform you that your PMC Bank has been put under regulatory restriction under Section 35A of B.R. Act by RBI for a period of 6 months due to irregularities disclosed to RBI. As the MD of the Bank, I take full responsibility and assure all the depositors that these irregularities will be rectified before the expiry of six months.”