PMC Bank’s customers can’t withdraw more than Rs 1,000; RBI gives directions

RBI, rbi, bank loan, advances, cash withdrawal, rbi direction, article 35 a

RBI has imposed directions under article 35A of the banking regulations.

Customers of Punjab and Maharashtra Cooperative bank will not be able to withdraw more than Rs 1,000 from their savings or current account for another six months. To secure the proper management of the bank, the RBI has imposed directions under article 35A of the banking regulations. Punjab and Maharashtra Cooperative bank will also not be able to grant or renew any loans and advances for another six months, without prior approval in writing from the RBI. In the same duration, the bank can neither make any investment nor it can incur any liability including borrowal of funds and acceptance of fresh deposits. The directions have been imposed from today.

Meanwhile, the bank management has assured to address the issue soon. The RBI has taken this step due to some irregularities in the accounts of the bank. Punjab and Maharashtra Cooperative bank has its branches spread over many states, including, Karnataka, Goa, Gujarat, Delhi, etc.

The central bank has further clarified that the directions by the central bank should not be construed as a cancellation of a banking license and the bank will continue to undertake banking business with restrictions till further notice. The directions on Punjab and Maharashtra Cooperative bank have been imposed even after the bank has made a net profit of around Rs 100 crores in the last two financial years. The bank has been in profit for at least the last four years, according to the official figures.

However, the non-performing assets of the banks have been consistently increasing since the FY16. In FY16, and FY17, the net NPA per cent of the banks was up to 0.96 per cent, which rose to 2.19 per cent in FY19. Higher NPA has led to an increase in the provisioning amount. The provisioning amount of Punjab and Maharashtra Cooperative bank doubled on-year in the last financial year. The bank made a provision of Rs 42 crores in FY18, which rose to Rs 88 crores in FY19, according to the bank’s annual report.