After detection of alleged irregularities in Mumbai-based Punjab and Maharashtra Co-operative (PMC) Bank, the Reserve Bank of India has placed restrictions on business of the bank for six months. RBI has barred it from allowing withdrawals of more than Rs 1,000 per account. Curbs imposed by RBI triggered panic in depositors and account holders of the bank. Customers and depositors of PMC Bank stormed social media to register their dissent over action taken by RBI. Some customers have sought the intervention of PM Narendra Modi into this matter. In addition to this, suicide warnings were also given by customers. Meanwhile, very soon the Andhra Bank and Union Bank would be merging and many bank employees will be laid off. The RBI is giving signal to all banks, since this is a tip of iceberg, now the bank employees too fear the loss of jobs.
It is worth mentioning that PMC Bank had business of Rs 20,000 crore comprising deposits of Rs 11,617 crore and advances to the tune of Rs 8,383 crore at the end of March 2019. It has 137 branches across India. The multi-state cooperative bank had 3.76 per cent gross non-performing assets (NPAs) and net 2.19 per cent NPAs as at the end of March 2019.
Teesta Setalvad tweeted, “Is this how ordinary Indians are going to be treated? Some fainted! Some shocked! RBI dicates! Depositors can’t access their own hard earned money. Shame.”
Is this how ordinary Indians are going to be treated? Some fainted! Some shocked! RBI dicates! Depositors cant access their own hard earned money. Shame #pmbsurvivors @YashwantSinha @SitaramYechury @RahulGandhi https://t.co/CRjGhct959
— Teesta Setalvad (@TeestaSetalvad) September 24, 2019
As per reports, on September 23, RBI issued an order under sub-section 1 of Section 35-A of the Banking Regulation Act, 1949. RBI has said depositors would be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance in every savings bank account or current account or any other deposit account. The bank could not grant or renew any loan, advances and make investments without prior approval of the RBI. These directions would remain in force for six months from the close of business of the bank on September 23, 2019, RBI said in a statement.
Praful Shah tweeted, “It’s nothing but bankruptcy. My Rs 25 lakhs, saved for daughters’ marriages, are now trapped. My lifetime saving getting washed out overnight. Feeling sad.”
Its nothing but bankruptcy. My 25 lakhs, saved for daughters’ marriages, are now trapped. My lifetime saving getting washed out overnite. Feeling sad.
— Praful Shah (@PrafulS98568293) September 24, 2019
A senior executive of PMC Bank said in course of inspection RBI had found some gaps in treatment of loans. He said that the bank was working to resolve the issue. Meanwhile, a message is being circulated in the name of Joy Thomas, the MD of PMC Bank, asking customers to exercise restraint. He claims in this message that objections raised by the RBI would be resolved within the six-month period, and the PMC Bank would soon revert to normal functioning. But the authenticity of his statement could not be confirmed.
Dipti Joshi, an account holder of PMC Bank said, “I was shocked when I got to know that RBI barred PMC Bank from carrying out any kind of business transactions for six months on Tuesday. How can a family survive with just Rs 1000 for 6 months, it’s not possible .You forced us to become digital and now we are not getting access to our own hard earned money. At least you should inform us so that we can do something, it’s ridiculous.”
Amruta Lokhande tweeted, “And what should the account holder do on receiving this http://message.Rs 1k is all that we can withdraw over 6 months. We stopped keeping cash at home because you encouraged online transaction and now we can’t even withdraw our own hard earned money.”
And what should the account holder do on receiving this https://t.co/Ir8x9kxP2Q 1k is all that we can withdraw over 6 months. We stopped keeping cash at home because you encouraged online transaction and now we can’t even withdraw our own hard earned money. @nsitharaman #pmcbank pic.twitter.com/WwlTEi6mNU
— Amruta Lokhande (@amrutaloki) September 24, 2019
The statement said that PMC Bank has been put on regulatory restriction under 35-A of RBI act for 6 months for irregularities. It further said, “I, Mr. Joy Thomas, M.D., regret to inform you that your PMC Bank has been put under regulatory restriction under Section 35-A of B.R. Act by RBI for a period of 6 months due to irregularities disclosed to RBI. As the M.D. of the Bank, I take the responsibility and assure all the depositors that these irregularities will be rectified before the expiry of 6 months. All efforts are made to remove the restrictions by rectifying the irregularities. I know it is a difficult time for all of you and any apology may not restore the pain you are undergoing. Please co-operate with us.” We assure that we will definitely overcome this situation and stand strong, he added.
Vijay Talreja tweeted,“#pmcbank news is heart breaking. This morning I witnessed many sr citizens and women crying in the bank. Withdrawal of Rs1000 over 6 mnths will push them below poverty line. Not enough to even buy peanuts for that duration. Pls help them urgently.”
@nsitharaman @nsitharamanoffc #pmcbank news is heart breaking. This morning I witnessed many sr citizens and women crying in the bank. Withdrawal of Rs1000 over 6 mnths will push them below poverty line. Not enough to even buy peanuts for that duration. Pls help them urgently.
— Vijay Talreja (@vjtrocks) September 24, 2019
Apart from putting a restriction of only Rs 1,000 withdrawal per account, the RBI has also barred the PMC Bank from renewing or granting new loans, making investments, accepting fresh deposits or discharging any payments under its liabilities except for the salaries of its employees, electricity bills and other office expenses.
Navin Jethmalani tweeted, “Whatever is reason, It is working of bankers not citizens. Only few accounts should be freezed. Citizens are scared now. What about their hard earned money. One citizen fainted outside.”
Whatever is reason,
It is working of bankers not citizens.
Only few accounts should be freezed.
Citizens are scared now.
What about their hard earned money.
One citizen fainted out side #pmcbank#ulhasnagar@TOIIndiaNews @toi @MumbaiMirror pic.twitter.com/Biev2tyCoj
— Navin Jethmalani (@Navu_Rockz) September 24, 2019
However, RBI has clarified that the issuance of directions should not, per se, be construed as a cancellation of a banking license by it. ”The bank will continue to undertake banking business with restrictions till further notice and instructions. The Reserve Bank may consider modifications of these directions depending upon circumstances,” it said.
Karan Thakkar tweeted, “There are election in Maharashtra in one month and if modi government will not take action to retrieve people’s money back from Punjab and Maharashtra bank then there will be affect on election result it’s clear.”
There are election in Maharashtra in one month and if modi government will not take action to retrieve people’s money back from punjab and Maharashtra bank then there will be affect on election result its clear
— Karan thakkar (@Kthakkar_97) September 24, 2019