Beginning September 24, account holders at PMC Bank won't be allowed to withdraw amounts exceeding ₹1,000 a day for the next six months.
The Reserve Bank of India (RBI) has barred the Mumbai-based Punjab & Maharashtra Cooperative Bank (PMC Bank) from carrying out a majority of its routine business transactions for a period of six months.
The sudden development sparked panic among the banks' depositors and sending shock-waves in city banking and business circles.
According to the RBI Directions, depositors will be allowed to withdraw a sum not exceeding ₹1,000 of the total balance in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI directions.
The central bank notice also mentioned that the bank will also not be able to grant or renew any loans and advances.
RBI imposed restrictions on the bank under Sub-section (1) of Section 35A of the Banking Regulation Act, 1949 read with Section 56 of the said Act. However, RBI has clarified that the restrictions are not to be "construed as a cancellation of banking license".
The urban co-operative bank is operational in the states of Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh, and Madhya Pradesh.