Explanations:The Reserve Bank of India (RBI) is the central banking institution of India, responsible for regulating and supervising the banking system in the country. In September 2019, the RBI took several measures to address the financial irregularities and liquidity issues at Punjab and Maharashtra Cooperative Bank (PMC). One of the key actions was to impose a withdrawal limit on account holders to prevent a run on the bank and to manage the outflow of funds.
The RBI's decision to set a withdrawal limit was a precautionary measure to ensure the stability of the bank and to prevent a sudden and large-scale withdrawal of funds that could exacerbate the bank's liquidity crisis. The limit was set at Rs. 1,000 per account holder, which was a relatively low amount compared to the other options provided. This limit was intended to be stringent enough to control the outflow of funds while still allowing account holders to meet their basic financial needs.
The rationale behind setting such a low limit was to ensure that the bank could manage its liquidity and continue to operate without facing immediate financial collapse. The RBI's actions were part of a broader strategy to address the issues at PMC and to restore confidence in the banking system. The withdrawal limit was later increased as the situation stabilized, but the initial limit of Rs. 1,000 was a critical measure taken to manage the crisis effectively.
Understanding the context of the RBI's actions and the specific measures taken during financial crises is crucial for students preparing for competitive exams, as such events often become topics of discussion and questions in exams like the UPSC, SSC, and various banking exams. The ability to recall specific details like the withdrawal limit set by the RBI in this case is a key aspect of general knowledge and current affairs preparation.