Mumbai: As the Reserve Bank of India (RBI) limited the cash withdrawals from the Punjab and Maharshtra Cooperative Bank (PMC) at Rs.1,000 per account for six months, hundreds of the customers of the bank are under panic.
The sudden move caused PMC Bank depositors to panic and led to protests and long queues outside the bank's branches on Wednesday. It has 137 branches that are spread across seven states in India.
In an attempt to pacify its customers, the Managing Director of PMC, Joy Thomas, in a text message to customers, attempted to reassure them that the bank's issues would be resolved within six months.
PMC is one of the Country's top five co-operative banks and the RBI’s restrictions also sparked renewed concerns about the health of India's troubled banking sector. While a probe into accounting lapses are going on, the speculation is ripe that the regulator may force a management change through a merger.
PMC Bank has also been barred from making fresh loans and taking deposits. The restrictions under Section 35A of the Banking Regulation Act are aimed at preventing a run on the bank that could end up endangering the stability of the entire financial system because of a contagion effect.
Gross under-reporting of bad loans is one of the reasons for the restrictions on PMC. The regulator is currently looking into the books of the bank, they added.