RBI extends curbs on PMC till June end
The Reserve Bank of India (RBI) on Friday said it has extended restrictions on withdrawals and deposits in the scam-hit Punjab and Maharashtra Cooperative (PMC) Bank till June 30, 2021.
The RBI had imposed restrictions on the multi-state cooperative bank in September 2019 after detecting financial irregularities. The RBI curbed all activities of PMC Bank, and appointed an administrator for the next six months.
The restrictions, including cap on withdrawal of money from customers’ accounts, were set to expire on March 31, 2021.
The extension comes after the delay in finalising a prospective investor for the bank. PMC Bank had received binding offers from certain investors for its reconstruction, in response to the Expression of Interest (EOI) dated November 3, 2020.
“The RBI and PMC Bank are presently engaging with prospective investors in order to secure best possible terms for the depositors and other stakeholders while ensuring long term viability of the reconstructed entity. Given the financial condition of the bank, the process is complex and is likely to take some more time,” said the RBI in its statement.
“It may be clarified that the process of reconstruction will be commenced as soon as the aforesaid objectives are achieved to the best possible extent,” the RBI added.
After superseding the board of the bank, the RBI found that nearly 73% of the bank’s total loan book size of ₹8,880 crore as of September 19, 2019, was exposed to real estate firm Housing Development and Infrastructure Ltd (HDIL).
In an alleged confession letter to the RBI, the bank’s managing director and chief executive officer Joy Thomas had accepted giving loans to HDIL and its related entity to the tune of ₹6,500 crore without informing all the board members. Thomas was later arrested.
Initially, the RBI had allowed depositors to withdraw ₹1,000 which was later raised to ₹1 lakh per account to mitigate their difficulties.