PMC Bank Crisis: How RBI's restrictions hurt lakhs of depositors?
PMC Bank Crisis: The Reserve Bank of India's banking restrictions on Punjab and Maharashtra Cooperative Bank (PMC Bank) has left lakhs of depositors into a huge snag. The Central bank has barred PMC bank from carrying out "any kind of business transactions" for six months and has put limits on the amount that can be withdrawn by depositors from the urban co-operative bank.
Meanwhile, in a big relief for lakhs of depositors, RBI on Thursday increased the withdrawal limits to 10,000 from 1,000, which it has fixed on Tuesday. Most importantly, people do FDs (Fixed Deposits) in Co-operative banks as they give more 1-2 per cent interest as compared to nationalised banks. However, the question remains intact: How RBI's restrictions hurt the lakhs of PMC Bank depositors and why it is a matter of concern?
What is RBI Restriction on PMC Bank?
PMC Bank Crisis: How RBI's restrictions hurt lakhs of depositors?
RBI imposed a restriction on PMC Bank under Sub-section (1) of Section 35A of the Banking Regulation Act for violating of various regulations. However, RBI did not cancel the licence of PMC Bank.
The PMC Bank has been barred from granting, renewing and loans and advances, make any investments, accept fresh deposits, etc, without the prior written approval from RBI.
How RBI's restrictions hurt lakhs of PMC bank depositors?
- PMC Bank depositors can't withdraw amount more than Rs 10,000 for 6 months
- The restriction on PMC bank has been levelled on the savings and current accounts or any deposit accounts,
- Depositors cannot do net banking even, as PMC Bank's online banking has been suspended.
- During the restriction period, the bank can't grant new loans or even accept any fresh deposits.
- EMIs for the loans with other bans won't be honoured.
- Depositors can't do utility payments through PMC Bank account.
- No SIPs, insurance premiums, EMIs or any other ECS amount will be debited from the bank, depositors need to register for a new bank account.
- ATMs have been taken off the payment network
- If the depositor's amount exceeds Rs 1 lakh and the bank goes completely bankrupt, then the depositor can only get Rs 1 lakh, as per DICGC rules.
- Bank has been barred from making any investment, incur any liability including borrowal of funds
- Bank cannot transfer or dispose of any of its assets or properties except as notified by RBI in the directions.
Also Read: PMC Bank customers do sit-ins at branches, HDIL headquarters
Also Read: RBI increases withdrawal limit for PMC Bank depositors from 1,000 to 10,000
