PMC bank withdrawal limit could be raised to ₹1 lakh, says expelled MD

PMC Bank, Punjab and Maharashtra Co-operative Bank, withdrawal limit, depositors, ₹10,000, ₹1,000, ₹1 lakh, RBI, managing director K Joy Thomas, loans, Housing Development and Infrastructure Limited, HDIL
The Punjab and Maharashtra Co-operative Bank had provided loans worth ₹2,500 crore to Housing Development and Infrastructure Limited. Photo: Facebook.

The withdrawal limit for depositors of Punjab and Maharashtra Co-operative (PMC) Bank has been increased to ₹10,000 from ₹1,000 and might further be increased to ₹1 lakh soon, its suspended managing director, K Joy Thomas said.

The liquidity issue of the bank came to the light when BJP leader Kirit Somaiya demanded action against the PMC bank board members as well as the Housing Development and Infrastructure Limited (HDIL).

The PMCB had provided loans worth ₹2,500 crore to HDIL. HDIL had been unable to service the debt for approximately 2-3 years, LiveMint quoted Thomas as saying.

PMC Bank and HDIL had maintained a steady banking relationship ever since the 90s, but the amount borrowed and lent had increased over the past years and went unreported to the RBI.


Thomas had reportedly admitted to the RBI that the PMC Bank’s loan amount to HDIL is over ₹6,500 crore, which is four times the regulatory cap or 73% of its entire asset worth of ₹8,880 crore. He had reportedly confessed after a board member leaked the actual balance sheet details to the RBI.

Joy Thomas may be booked for hiding loan information, RBI appointed administrator of PMC bank, JB Bhoria said. “The inspection team from the RBI is still doing its work to collect proof regarding any wrongdoing at the bank. But now that Thomas has openly disclosed that they were hiding loan information, we feel it is a criminal offense. A complaint will be filed soon,” Bloomberg Quint quoted Bhoria as saying.

Also read: RBI hikes withdrawal limit from ₹1,000 to ₹10,000 for PMC bank customers

Thomas claimed that the increase in loan amounts couldn’t be exposed as they wanted the bank to grow fast, and feared that they would lose their customers once depositors got wind of their debt history.

The management eventually came clean to the RBI on September 19 when they had a meeting with RBI’s executive director Rabi Mishra. Mishra had said that an inspection was due and that a period of two months was usually granted to a bank to carry on with their activities. PMC Bank management sought additional time to stabilise their condition.

The day after the inspection, however, on September 23 evening, the bank got a restraining order and was barred from carrying out routine banking operations, especially withdrawals, reported ANI.

“They didn’t give us time to proceed further. They suspended the board and restrained us,” Thomas said, according to ANI.

Also read: PMC says it has enough liquidity, depositors money fully safe

On September 23, RBI took control and enforced restrictions of ₹1,000 on withdrawals over six months for depositors to make up for the lack of liquid cash inflow. On Thursday (September 26), it extended the withdrawal limit to ₹10,000 till six months since customers were in distress over the limitations.

It also recommended the removal of PMC Bank chairman Waryam Singh last year after it had found out about his involvement in sanctioning loans to HDIL and related entities. RBI’s recommendation was sent to the Registrar of Cooperative Societies of Maharashtra which has administrative control over the cooperative banks in the state.

Thomas said the RBI’s modus operandi was a bit harsh. “PMC Bank has enough liquidity and we were maintaining the necessary reserves under CRR (Cash Reserve Ratio),” he claimed.

“RBI could’ve calculated the liquidity situation much better without affecting the depositors. What happened wasn’t an issue of fraudulence. It was a technical issue and it could’ve been handled better,” he said.

“The bank also had enough security for all the loans it had granted. There was no reason to worry,” he assured.

Meanwhile, hundreds of account holders assembled at the main entrance gate of the Dream Mall, Mumbai on Sunday (September 29) said that they will boycott elections if the PMC Bank crisis is not resolved. They held boards that read ‘Howdy account holder’ and ‘No recovery, No election’. Some protesters have said that they will take their protest to Azad Maidan and even to the Election Commission.

(With inputs from agencies)