The Reserve Bank of India (RBI) has put Punjab and Maharashtra Cooperative Bank under restrictions for six months, meaning the lender cannot give fresh loans and accept fresh deposits. Withdrawals have been capped at Rs 1,000 per account.
When a bank is put under restriction, usually, depositors cannot withdraw money and the bank cannot give fresh loans and accept fresh deposits. These restrictions are put when there are three consecutive years of adverse supervisory report.
The move resulted in chaos outside its branches in the financial capital.
The RBI monitors banks' health and issues such directions in case of concerns over the financial health of an institution. However, no reasons were specified by the central bank for its restrictions on PMC Bank.
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"The issue of the directions by the Reserve Bank should not, per se, be construed as a cancellation of its banking licence. The bank will continue to undertake banking business with restrictions till further notice/instructions," the RBI said in a notification.
The restrictions will be in force for six months, the RBI said.
According to PMC Bank's website, the lender was awarded the scheduled status in 2000 and has a presence in multiple states. The bank could not be reached for comments immediately.
(Inputs from PTI)