Money & Banking

PMC Bank to reduce salary cost by 30 per cent

K Ram Kumar Mumbai | Updated on August 12, 2020

Scam-hit Punjab & Maharashtra Co-operative (PMC) Bank’s management has decided to reduce the salary cost by 30 per cent. This move comes 10 months after the bank was put under all inclusive directions by the Reserve Bank of India.

As of March-end 2019, the multi-state co-operative bank, with 137 branches spread across Maharashtra, Delhi, Karnataka, Goa, Gujarat and Madhya Pradesh, had 1,814 employees on its rolls.

Cost-cutting measures

As per its recast profit and loss account for FY19, salaries and allowance aggregated ₹113.62 crore. Besides clamouring for either the revival of the bank or its merger with another bank and return of their hard-earned money, distressed depositors have been pressing for cost-cutting measures at the bank.

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.

“Considering the severe financial crisis and huge losses accumulated/ being incurred by the bank, it is imperative to reduce the expenses relating to staff.”

Calls to Shiny Mithbaokar, Chief Executive Officer, PMC Bank, seeking her comments on salary reduction, remained unanswered.

Staff protest

Employees have reportedly gone on strike to protest against salary reduction, which is effective from the month of July 2020.

Chander Purswani, President, PMC Depositors Forum, emphasised that at a time when depositors are suffering financial hardship and psychological distress due to the inability to access funds locked up in the bank, belt-tightening measures were imperative.

Deposit withdrawals having been capped at ₹1-lakh per depositor for the 15-month period between September 23, 2019 (when the bank was placed under AID) and December 22, 2020.

According to the RBI, the financial position of PMC Bank has been substantially impaired due to the fraud perpetrated on it by certain persons.

The bank has filed a complaint with the Economic Offences Wing, Maharashtra Police, against its officials and borrowers (specifically promoters of a real estate group) associated with the fraud/financial irregularities in the bank and manipulation of its books of accounts.

In a speech last month, the RBI Governor Shaktikanta Das 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.”

Sayali Bhoir, Secretary and CEO, Maharashtra Urban Co-operative Banks Federation, underscored that efforts are being made to restructure/ revive the bank.

“One of the proposals that has been mooted is that PMC Bank’s branches in Maharashtra will be merged with the Maharashtra State Co-operative (MSC) Bank. MSC Bank is ready for this,” she said.

When it comes to the bank’s branches in other States, Bhoir felt that they could be merged with the State Co-operative Banks in those States.

One-time settlement

Another proposal is that a one-time settlement scheme could be introduced so that stressed borrowers can come forward and settle their outstanding dues.

Published on August 12, 2020

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