The Reserve Bank of India on Friday froze the business of the Mumbai-based Maratha Mandir Co-operative Bank Ltd (MMCBL) with immediate effect and imposed a withdrawal ceiling of Rs 5,000 per account, making it the second bank after South Indian Co-operative Bank Ltd to face such a restriction within a week.

A RBI spokesperson told PTI that business of MMCBL has been frozen as the withdrawal pressures continued, mainly at the Ghatkopar, Antop Hill and Jogeshwari branches, and fixed a ceiling on withdrawals. The bank had seen withdrawals of around Rs 10 crore in the last two days.

However, a similar action against Punjab & Maharashtra Co-operative Bank Ltd (PMCBL), where depositors have also queued up at three branches, has not been proposed.

"PMCBL is well managed and there was no need for depositors to panic," RBI sources said.

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Recent reports on weak financial health of certain banking entities such as Global Trust Bank, South Indian Co-op Bank and CBI raids on Bank of Maharashtra officials in connection with a fraud have resulted in doubts among depositors, banking sources said.

However, MMCBL chairman Ashok Vichare and PMCBL managing director and CEO J Thomas have stated that liquidity was not an issue.

Vichare attributed the panic withdrawal in MMCBL to 'a false propaganda spread by a shareholder on the financial health of the bank'.

MMCBL, which has 11 branches and one extension counter, registered a net profit of Rs 25 lakh for the year ended March 2004 while its net non-performing assets were on the higher side at 25 per cent (Rs 20-22 crore), he said.

The deposits and advances stood at Rs 280 crore and Rs 139 crore respectively, he said adding the capital adequacy ratio was pegged at 9.9 per cent, which has now increased to 11.2 per cent.

Thomas said the PMCBL's deposits were at Rs 1,070 crore with advances at Rs 600 crore as on March 2004. The net NPAs and capital adequacy were 3.5 per cent and 14.5 per cent respectively.

Early this week, South Indian Co-operative Bank had seen a run on its deposits due to high level of NPAs, which resulted in the RBI imposing certain restrictions with the withdrawal ceiling fixed at Rs 1,000 per account.

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