The Reserve Bank of India (RBI) has increased the withdrawal limit from Punjab and Maharashtra Cooperative (PMC) Bank to Rs 1 lakh, inclusive of Rs 50,000 allowed earlier.

With the increase in limits, 84 per cent of the troubled cooperative bank’s depositors will be able to withdraw their entire money deposited with it.

The central bank said in a notification that it took the decision after a review of the bank’s liquidity position, and in an effort to mitigate the difficulties of the depositors during the prevailing Covid-19 situation.

The central bank said work on an effective resolution of the bank has been affected due to the Covid-19 crisis. “Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges/limitations in resolution of the bank,” the central bank said.

But consultation on a resolution process is continuing with various stakeholders and therefore, the restrictions on the bank will continue for a further six months to take the process forward.

The RBI had imposed withdrawal and other restriction on the bank on September 23, 2019 after finding that 75 per cent of the loans were fraudulently given to HDIL Group and that subsequently went bad.

The central bank had last increased the withdrawal limit to Rs 50,000 per depositor on November 5, 2019.