Update: RBI has increased the limit of withdrawal per account to INR 10000.
The Reserve Bank of India has put restrictions on a Mumbai based Bank Punjab and Maharashtra Co-operative (PMC) Bank. Account holders can withdraw a sum of only upto INR 1000 from each account.
PMC Bank recently reported a business of INR 20000 Crore, however the RBI has found irregularities in the business of the bank and hence taken such a step for the bank.
The bank could not grant or renew any loan, advances and make investments without prior approval of the RBI. The directions would remain in force for six months from the close of business of the bank on September 23, 2019, RBI said in a statement.
A twitter user expressed his discomfort with the directions as his aunt has kept her savings in PMC Bank and now she cannot withdraw them for another six months.
Money Back Guarantee from PMC Bank?
While it is reasonable to fear that those with deposits in PMC bank stand to lose their money, it is not entirely true.
The money cannot be withdrawn until six months, however, RBI as a regulator ensure protection of Consumer funds.
These funds will remain in the bank’s books. While Borrowers who also have deposits in the bank may see a settlement happening within those accounts, customers will only deposits have to wait until the six month period is over for further instructions.
The Regulations allow banks to insure deposits upto INR 1 lakh. That means, any user with less than 1 lakh in deposit can get the full amount back if the bank has taken the insurance. From the Press Release of PMC bank, it seems they have.
But it is hard to say right now, how much RBI or the government can ensure the refund of deposits above one lakh INR. Per Business Standard Report, the multi-state cooperative bank had 3.76 per cent gross non-performing assets (NPAs) and net 2.19 per cent NPAs as at the end of March 2019. It has 137 branches in India.
Don’t Put All Eggs in One Basket
Incidents such as that of PMC Bank, is a constant reminder that everyone should diversify their investments. Even if one is supposed to keep all the money in the bank, they shouldn’t choose one and only one bank for it.
If a part of your investment is in crypto, we should warn you that this could happen to you as well. A Crypto exchange can go insolvent and you stand to lose all your holdings. The best way to protect your cryptocurrency is in a wallet, where you control the private key.
Where do you store your Cryptocurrencies? Let us know in the comments below.