The Reserve Bank of India (RBI) put severe curbs on Punjab and Maharashtra Co-operative (PMC) Bank on Tuesday, including on cash withdrawals, amid a probe into accounting lapses, sparking speculation that the regulator may force a management change through a merger.

Cash withdrawals were capped at ₹1,000 per account for six months, spreading panic among depositors. PMC Bank has also been barred from making fresh loans and taking deposits.

The restrictions under Section 35A of the Banking Regulation Act are aimed at preventing a run on the bank that could end up endangering the stability of the entire financial system because of a contagion effect.