Money & Banking

Fraud-hit PMC ‘in merger talks’ with major banks

Our Bureau Mumbai | Updated on September 16, 2020 Published on September 16, 2020

Names of the banks could not be ascertained

To stay afloat, scam-hit Punjab & Maharashtra Co-operative (PMC) Bank’s management is in talks with other banks for a possible merger. Names of the banks could not be ascertained.

This comes even as RBI Governor Shaktikanta Das had recently observed that the central bank is engaged with all (PMC Bank) stakeholders to find out a workable solution as losses are very high, eroding deposits by more than 50 per cent. According to the RBI, the financial position of PMC Bank has been substantially impaired due to the fraud perpetrated on it by certain persons.

In February, Maharashtra State Co-operative Bank had written to Finance Minister Nirmala Sitharaman seeking branch merger with Punjab and Maharashtra Co-operative Bank. But not much has moved in this direction. Any merger can happen only when the exact extent of the fraud and the liabilities arising are ascertained through a forensic audit, according to banking experts.

It’s nearly a year since the RBI placed restrictions on PMC Bank after a loan fraud came to light. Though the RBI has made some relaxations, many depositors are still waiting to get their money back. According to a Reuters report, PMC has “tried to engage with major banks of the country to request for a merger”, the bank’s administrator said in a September 10 filing at the Delhi High Court, without identifying the banks or giving other details.

Meanwhile, the Bank’s management has decided to reduce the salary cost by 30 per cent. According to an inter-office communication to all staff members: “After imposition of all inclusive directions (AID) on our bank, the banking activities are very minimal. Hence, the expenses also need to be reduced appropriately.”

The introduction of the ‘Banking Regulation (Amendment) Bill 2020’ in the Lok Sabha on Monday has raised hopes among the anguished depositors. Ever since the bank was put under directions with effect from the close of business on September 23, 2019, deposit withdrawal was capped at ₹1 lakh per depositor. Due to this cap, depositors, especially senior citizens, are facing hardship as they depended on interest income to meet the monthly expenses. So far, almost 60 PMC Bank depositors have lost their lives.

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Published on September 16, 2020
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