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RBI puts Punjab & Maharashtra Co-op Banks under regulatory restrictions for six months after finding irregularities

Sep 24, 2019

The Reserve Bank of India (RBI) has placed the Punjab and Maharashtra Co-operative Bank Limited, Mumbai, Maharashtra, under regulatory restrictions for six months as per the provision of section 35(A) of the Banking Regulation Act.

RBI, which has issued directions on September 23 saying depositors will be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance in every savings bank account or current account or any other deposit account by whatever name called.

'Punjab and Maharashtra Co-operative Bank Limited, Mumbai, Maharashtra without prior approval in writing from the Reserve Bank, will also not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated September 23, 2019,'' RBI said in its directions.

According to the banking regulator, the directions will remain in force for a period of six months from the close of business of the bank on September 23, 2019.

RBI, however, has clarified that the issuance of directions should not, per se, be construed as a cancellation of a banking license by it. ''The bank will continue to undertake banking business with restrictions till further notice and instructions. The Reserve Bank may consider modifications of these directions depending upon circumstances,'' is said.

Punjab and Maharashtra Cooperative Bank managing director Joy Thomas in his statement said that the bank has been put under regulatory restrictions by RBI for six months due to irregularities disclosed to RBI.

''As the MD of the bank, I take the responsibility and assure all the depositors that these irregularities will be rectified before the expiry of six months. All efforts are made to remove the restriction by rectifying the irregularities. I know it is a difficult time for all of you and any apology may not restore the pain you are undergoing,'' he added.

Thomas has sought the cooperation of depositors and customers and assured that the bank will definitely overcome this situation and stand strong.

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