Some Relief For PMC Bank Account Holders As RBI Increases Withdrawal Limit To Rs 25,000

Rakesh Wadhawan and Sarang Wadhawan, senior executives at Housing Development and Infrastructure Ltd (HDIL), have been arrested by the Economic Offences Wing of the Mumbai Police in connection with the ongoing investigation into the financial irregularities in the crisis-hit? Punjab Maharashtra Co-operative (PMC) Bank.

The duo was arrested after the EOW of Mumbai police registered a case against the bank officials and Wadhawans for cheating, forgery and several other sections.

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Properties worth around Rs 3,500 crore, belonging to HDIL, have also been frozen by the EOW.?

They along with some top executives of the PMC Bank, including the then chairman Waryam Singh and its managing director Joy Thomas, along with other bank officials, were accused of running an elaborate fraud for nearly a decade.

They had allegedly created some 44 fictitious accounts to hide the Rs. 6,500 crore loans given to the real estate firm to evade RBI scrutiny into its non-performing assets.?

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Troubles began when HDIL, defaulted on loan repayments, which offset the financial balance of the bank.

Joy Thomas, the suspended MD of PMC has admitted that the bank did not report the financial exposure to the Reserve Bank of India (RBI) for over six years.

The Rs 6,500 crore exposure is estimated to be around 73 percent of its total loans of PMC.

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The RBI had on September 23 put regulatory restrictions on the bank after finding irregularities. This included a restriction on the withdrawal of money from accounts and barring the bank from lending and accepting fresh deposits.

Initially, the withdrawal limit was Rs 1000 per account but it was later increased to Rs 10,000 per account on September 26 for six months.

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On Thursday, the RBI further enhanced the limit for withdrawal to Rs. 25,000.?

With the above relaxation, more than 70 percent of the depositors of the bank will be able to withdraw their entire account balance, RBI said in a statement.

The financial fraud in PMC which came to light a year after the PNB loan scam which surfaced in 2018 has raised some serious questions about the health of the banking sector as a whole.