RBI extends restrictions on PMC Bank to March

The Reserve Bank of India (RBI) has extended the validity period of its Directions for the scam-hit Punjab and Maharashtra Co-operative Bank for a further period from December 23, 2020 to March 31, 2021, subject to review.

The bank, which was placed under Directions with effect from the close of its business on September 23, 2019, has informed the RBI that in response to its Expression of Interest (EoI), four proposals for reviving it have been received.

“These proposals will be examined by the bank with regard to their viability and feasibility taking into account the best interest of the depositors. To undertake this process, the bank would need some more time,” the RBI said in a statement.

The Directions for PMC Bank were last extended for a further period of six months from June 23, 2020, to December 22, 2020

Keeping in view the best interest of all stakeholders, it is considered necessary to extend the aforesaid Directions, RBI said.

The deposit withdrawal limit is currently capped at ₹1 lakh per depositor for the entire period that the bank under directions.

A Mumbai-based financial services group is among four entities that are understood to have submitted their letter of intent (LoI) to revive the PMC Bank.

According to banking sources, the financial services group which has submitted its LoI is headed by the former India head of a foreign bank.

PMC bank has been placed under RBI Directions due to a huge fraud perpetrated by the promoter of a real estate group and some bank officials.

As per the Expression of Interest, the bank wants to identify a suitable equity investor/ group of investors willing to take over management control so as to revive the bank and commence regular day-to-day operations.

Subsequent to commencement of the normal day-to-day operations, it will be open for the investor(s) to convert the bank into a Small Finance Bank by making an application to Reserve Bank of India, subject to compliance of the RBI guidelines on Voluntary Transition of Primary (Urban) Co-operative Banks (UCBs) into Small Finance Banks (SFBs), it added.