The Reserve Bank of India (RBI) announced on Friday that regulatory restrictions on Punjab and Maharashtra Cooperative (PMC) Bank are being extended by another six months till December to ensure the bank's takeover by Centrum Financial Services.
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"Taking into account the time required for the completion of various activities involved in the process, the validity of the directive dated September 23, 2019, as modified from time to time, has been extended for a further period from July 1, 2021, to December 31, 2021, subject to review," an RBI notification read.
The central bank, in September 2019, superseded PMC Bank's board, and also placed the bank under regulatory restrictions, including announcing a cap on withdrawal by customers. The action was taken after several financial irregularities, hiding and misrepresentation of loans given to real estate developer Housing Development and Infrastructure Limited (HDIL) were detected.
The RBI initially allowed depositors to withdraw ₹1,000 which was later raised to ₹100,000 per account in a bid to mitigate their difficulties.
{{/usCountry}}The RBI initially allowed depositors to withdraw ₹1,000 which was later raised to ₹100,000 per account in a bid to mitigate their difficulties.
{{/usCountry}}Friday's announcement marks yet another extension of regulatory restrictions on PMC Bank. In June 2020, the restrictions were extended by six months till December 2020; this was further extended till June 30, 2021.
On June 18, the RBI gave its "in-principle" approval to Centrum Financial to set up a small financing bank under the guidelines for "on tap" Licensing of Small Private Banks in the Private Sector. This was in response to an Expression of Interest (EoI) floated by PMC Bank, in November 2020, for its reconstruction, and for which several proposals were received.
After careful consideration, the RBI found proposals from Centrum Financial, which has formed an equal joint venture with Resilient Innovations, to be "prima facie feasible."
(with inputs from PTI)