PMC Bank Depositors Will Have To Pay Interest on Deposits Despite Having No Access To Their Money

Customers and depositors of the Punjab & Maharashtra Co-Operative Bank, also known as PMC Bank, are currently facing a dire situation with regards to their deposits. The bank is currently deducting 10 per cent on the interest earned on deposits as TDS (tax deducted at source). This is primarily because banks are supposed to deposit the TDS on time with the tax department to avoid penalties. 

Also Read - RBI Doubles Withdrawal Limit For PMC Depositors, But Their Troubles Are Far From Over 

Additionally, the depositors are currently unsure if they will ever get their deposits back. So this basically means that even when account holders aren’t fully certain about the status of their money, they are still expected to pay the interest on their deposits.

It is said that similar concerns may appear for depositors at cooperative banks as well as Deposit-Taking Non-Banking Financial Companies or NBFCs that are regulated by the Reserve Bank of India (RBI).

Also Read - RBI Appoints AK Dixit As New Administrator Of PMC To Find Viable Solution

As per RBI policies, if a cooperative bank or NBFC is found to be mishandling the operations, the RBI can block depositors from withdrawing the money from their accounts or even make payments under the Banking Regulation Act.

These restrictions once imposed could take years to be lifted, causing significant burdens on the depositors. In such cases, the viable solution usually is to merge the institution with another bank or simply liquidate the bank. However, until either of these things happen, the depositors have no guarantees on their deposits.  

It has been a year since the sanctions were imposed and there has been no major relief offered to the depositors. To mark the one year anniversary of these sanctions, the depositors had planned a protest outside RBI building at Fort but that had to be called off as they were unable to get the requisite permission for the same.