The Reserve Bank of India (RBI) on Tuesday raised the withdrawal limit for depositors of Punjab and Maharashtra Cooperative Bank (PMC) to Rs 50,000.

After an alleged Rs. 4,355 crore scam came to light at the PMC Bank, the RBI initially capped withdrawals at Rs 1,000 because of the liquidity crisis, and later hiked it to Rs 40,000. Now the limit has been raised to Rs 50,000 per account.

PMC Bank
The latest decision taken by RBI comes as a relief for the hapless account holders of PMC Bank who have been thrown into a crisis by the scam-hit bank.

This is the fourth time the regulator has increased the withdrawal limit since it clamped down on PMC Bank on September 23, capping withdrawals at Rs 1,000 per customer, which led to a lot of distress and criticism.

“The RBI, after reviewing the bank’s liquidity position and its ability to pay its depositors has decided to further enhance the limit for withdrawal to Rs 50,000, inclusive of Rs 40,000 allowed earlier,” the banking regulator said in a statement on Tuesday.

With the above relaxation, more than 78 percent of the depositors of the bank will be able to withdraw their entire account balance.

The RBI has also been decided to allow the depositors to withdraw from the bank’s ATMs within the prescribed limit of Rs 50,000.

The Reserve Bank further said it was closely monitoring the position and will continue to take further steps as are necessary to safeguard the interest of the depositors of the bank.

Punjab & Maharashtra Cooperative Bank, which is among the top 10 urban cooperative banks, was placed under an RBI administrator on September 23 for six months due to massive under-reporting of dud loans.

The bank, over a long period, had given over Rs 6,500 crore in loans to HDIL, which is 73 percent of its total advances, and which has turned sour with a shift in the fortunes of the now-bankrupt company.

Its total loans stood at Rs 8,880 crore and the deposits at over Rs 11,610 crore. There have been massive protests across the city from the depositors following the RBI action.

(With inputs from sources)