The Reserve Bank of India (RBI) has increased the withdrawal limit for PMC Bank account holders to Rs 10,000 from Rs 1,000. RBI has said that with this raised limit, 60 percent depositors will be able to withdraw all their money.

RBI had put Punjab and Maharashtra Cooperative Bank under restrictions for six months on Tuesday which means the lender cannot give fresh loans and accept fresh deposits. Withdrawals were initially capped at Rs 1,000 per account for the six months.

Sources close to the development have told CNBC-TV18 that PMC Bank MD, Joy Thomas, has been suspended. Speaking to CNBC-TV18 yesterday, Thomas had said, "We have ample assets to cover all liabilities of the depositors."

Thomas also said that RBI imposed restrictions on the bank because of divergences in NPAs but added that the step taken by the central bank is too harsh.

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Why RBI imposed restrictions on PMC Bank and what lies ahead

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 last available accounts of the bank show a profit of Rs 99 crore and a net NPA of 2.19 percent. It is important to note that RBI has taken over as administrator of the bank only on Monday night. It is believed that the bank has maintained its SLR (statutory liquidity ratio) and CRR (cash reserve ratio)

First Published:Sept 26, 2019 3:30 PM IST