Citing many regulatory lapses, including massive under-reporting of NPAs, the Reserve Bank of India (RBI) Tuesday put a slew of restrictions on Punjab & Maharashtra Co-operative Bank (PMC) for six months.

The major restrictions include capping withdrawals at Rs 1,000 per customer during the six-month period and banning the bank from extending new loans.

The city-based bank has around Rs 11,000 crore of public deposits.

"PMC without prior approval in writing from the RBI, will also not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowing funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations," the RBI said in a statement without giving any reasons for the regulatory action.

Sources, however, said the regulatory action came primarily because of the massive under-reporting of bad loans, which is high double digits. The urban co-operative bank also cannot enter into any arrangement for sale, transfer or otherwise dispose of any of its properties or assets.

The RBI, however, said the move should not be construed as a cancellation of its banking licence. As per the bank's annual report, its net profit declined marginally 1.20 percent to Rs 99.69 crore for the year to March 2019, while its net NPAs more than doubled to 2.19 percent from 1.05 percent.

The bank's board started conducting an internal inspection from last 10-15 days, after realising massive under-reporting of NPAs, sources said. "All key bank officials were part of this inspection and for the past four days none of them was allowed to leave the office," said an employee who did not wish to be named.

All urban co-operative banks are regulated by the RBI and it does carry out an annual supervisory inspection on them based on their audited balance-sheet.

Sources said the RBI has also superseded the board of PMC and a team from the central bank is also carrying out an inspection of its book from Tuesday onwards. The repeated calls to managing director Joy Thomas did not elicit any response.