Banking wrap: RBI hikes deposit withdrawal limit for PMC Bank customers; lenders count on realty fund for NPA relief

The Reserve Bank of India (RBI) increased the cash withdrawal limits to Rs 50,000 for customers of Punjab and Maharashtra Cooperative (PMC) Bank this week and ordered reopening of its ATMs after a gap of two months.

While the move would allow 78 percent of the bank’s depositors to withdraw their entire balance, it is still a long way to go for other customers whose retirement savings or business accounts are locked up in the bank.

Here are some of the key developments from the banking sector, from the last week:

RBI has increased deposit withdrawal limit for Punjab and Maharashtra Cooperative (PMC) Bank customers to Rs 50,000 from November 5. This includes the limit of Rs 40,000 that was relaxed earlier. The move will allow 78 percent of the bank’s depositors to withdraw their entire account balance.

The Reserve Bank has also decided to allow depositors to withdraw cash from the bank’s own ATMs within the relaxed limit of Rs 50,000.

The Alternative Investment Fund (AIF), to be set up by the government to revive the housing sector, will come as a major relief to lenders that are looking to shed off bad loans stuck in stalled projects.

Deepak Parekh, chairman of Housing Development Finance Corporation (HDFC), said that some developers have been facing troubles only due to a slowdown in sales and had to be declared as NPAs.

Private lender ICICI Bank disbanded its project finance division in September, owing to lack of fresh demand for loans in the infrastructure sector, according to an official.

While the bank is still open to lending opportunities in the sector, it has reallocated the specialised staff to its larger wholesale banking vertical that caters to clients across sectors.

After reporting an uptick in slippages in the second quarter of current financial year, Bank of Baroda, India’s second largest lender, expects asset quality to improve by the March-end.

The state-owned lender expects net non-performing assets (NPAs) to ease below 3.5 percent by March 2020 and slippages to be lower than levels witnessed in the second quarter.