Thread by @deepakshenoy

A quick thread on what to do if you own deposits in PMCBANK .

1) THe bank has been put under "directions". Meaning you can't withdraw more than Rs. 1000 from any account. This is something you should withdraw immediately anyhow. rbi.org.in/Scripts/BS_Pre…

2) How long could these directions last? A LONG time. Another bank, the Rupee Cooperative bank, was in such directions as of Feb 2013 . And it's still in that mess now. See:

rbi.org.in/Scripts/BS_Pre…

and latest update:
rbi.org.in/Scripts/BS_Pre…

Three years after the first notification, Rupee Coop bank account holders were allowed to withdraw Rs. 20,000 per account (increased from Rs. 1000 per account)

So to repeat - the PMC Bank mess can last a long time. Even a change in the 1000 rs. withdrawal limit can be far away.

The bank can no longer lend - so it has to recover without lending to new borrowers. This will need it to be merged with another bank. The bank has, by itself, taken over other dying cooperative banks in the past.

As a deposit holder, you have a right to go to court against the bank - and you should. However, the situation will take years to resolve. Unless RBI acts fast, confidence in coop banks is going to fall. RBI has not acted fast in the past.

At this point, I would suggest that please do not keep your money in cooperative banks. RBIs total lack of transparency and slow resolution means there is little hope of getting your money back if things go wrong.

The fear is that this will trigger a run on cooperative banks. In fact, my suggestion to exit will also play a part. But unless RBI acts to soothe nerves, this will be the default mode of action. /End.

More: This is really RBI's fault. They need to ensure speedy resolution (within three months) or refund as much as possible. This particular bank has nearly 25% SLR = enough to return 25% of the money back. And it might also have insurance. RBI needs to get this sorted now.

Even more: Yes, PMCBANK is insured by DICGC for Rs. 100,000 per depositor. See: dicgc.org.in/FdLibCoOperati…

There's a process to claim. I'll try and find it.