The Reserve Bank of India took control of PMC last September after
it was accused of fraud and concealing non-performing loans.
In February,
82-year-old Kishan Lal appealed to India's finance minister for help, saying in
a Twitter message he was ready to donate his kidney and eyes if someone could
help arrange funds to treat his daughter, who had a brain tumour.
The Lals had enough savings to tide over the medical crisis - more than 2.5
million rupees ($33,450) in Punjab
& Maharashtra Co-operative (PMC) Bank. But withdrawals were capped at
50,000 rupees from each account at the time because authorities were
investigating fraud at PMC.
The withdrawal cap
is now at 100,000 rupees per depositor.
"I just
borrowed money from wherever I could, I had to save my daughter," said
Lal. "If I had access to my own money, I'd not have been ashamed."
The Reserve
Bank of India (RBI) took control of PMC last September after it was accused
of fraud and concealing non-performing loans. PMC's top officials and the
owners of a realty company that received the bulk of the loans were arrested.
The withdrawal cap
has left many of PMC's over 900,000 depositors in deep difficulty. Some say
they are struggling to clear loans or pay their children's school fees, while
others say they depend on friends for their groceries.
The situation at
PMC has also amplified concerns about the health of India's tens of thousands
of co-operative banks, which often serve communities in the rural interior and
have assets worth around $220 billion, about 11% of India's total banking
sector assets.
These banks, many
of which are tiny, are subject to less stringent regulation than commercial
banks and currently, more than two dozen of them are facing lending or
withdrawal restrictions by the RBI because of financial irregularities.
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