In a relief to protesting account holders of the of Punjab and Maharashtra Cooperative Bank (PMC), the Reserve Bank of India (RBI), on Thursday, hiked withdrawal limit to Rs 10,000 from Rs 1,000 for PMC's depositors, according to PTI. This development comes two days after RBI took control of the bank for six-months. It had also capped withdrawals at ₹1,000 per account and the bank is not allowed to make any fresh loans for six months. This announcement by the Central bank caused chaos throughout the financial capital, with panicked account holders crowding the bank.
Earlier in the day, employees of Punjab and Maharashtra Co-operative (PMC) Bank sat outside the residence of the owner of Housing Development and Infrastructure Ltd (HDIL) group protesting against the company, according to ANI. The bank had admitted that HDIL was a major defaulter in the bank. Apart from employees, account holders too were seen protesting outside the bank on Thursday. Long-time account holders were lamenting on the withdrawal limit.
Mumbai: Employees of Punjab and Maharashtra Co-operative (PMC) Bank sit outside the residence of the owner of Housing Development and Infrastructure Ltd (HDIL) group, in protest. The group is a loan defaulter at the bank. #Maharashtra pic.twitter.com/5pEMOu9VfJ— ANI (@ANI) September 26, 2019
PMC had admitted on Wednesday, that one large account-HDIL was the sole reason for the present crisis, as per PTI. The bank's former managing director Joy Thomas had allayed fears stating all accounts were safe and fully-secured. He said the bank has cash liquidity of around Rs 4,000 crore in the form of SLR (statutory liquidity ratio) and CRR or cash reserve ratio. But, he admitted that the problem arose because of under-reporting of NPAs from the HDIL account.
"All other loans are more than fully-secured and there is no need for any customer to panic," Thomas told PTI. He added, "We have enough liquidity and back-up securities for all what we have lent. As a cooperative bank, we never do unsecured lending and our loan coverage ratio has always been 100-110 percent," Thomas said. He added that the slum redevelopment company, which has landed in cash crunch, has already gone to the bankruptcy now, has been delaying payments for the past few years.
Thomas said that the bank will be out of the regulatory restrictions much ahead of the RBI's six months period, say in two-three months. He said the focus is to safeguard the interest of small depositors as it is the festive season and they would want money. RBI too had dismissed reports about closing down certain commercial banks as false. Supporting the Central Bank's statement, Finance Secretary Rajeev Kumar too has added that there was no question of bank closure, as reported by ANI. He added that such mischievous rumours are baseless, as banks are articles of faith.