Money & Banking

RBI is trying to find workable solution for PMC bank: Governor Shaktikanta Das

Our Bureau Mumbai | Updated on July 11, 2020 Published on July 11, 2020

RBI Governor Shaktikanta Das

Scam-hit Punjab and Maharashtra Co-operative (PMC) Bank’s losses are very high, eroding deposits by more than 50 per cent, according to Governor Shaktikanta Das.

The Reserve Bank of India (RBI) is engaged with all stakeholders to find out a workable solution for the Bank, the Governor said the SBI’s 7th Banking and Economic Conclave.

PMC Bank plunged into a crisis due to the massive fraud perpetrated by the promoters of a real estate group and some bank officials.

Harried depositors of PMC Bank have been running from pillar to post ever since the Bank was placed under Directions (in late September 2019) to get their money back. They want the bank either revived or merged with another bank.

Depositors, many of them senior citizens, who solely depend on the interest income to meet monthly expenses, say they are finding it difficult to make ends meet due the ₹1 lakh per depositor withdrawal cap (for the entire period beginning from the close of the Bank’s business on September 23, 2019 till December 22, 2020) amid the Covid-19 pandemic.

UCB supervision

Das said special efforts are being made to move towards a risk-based and pro-active supervisory approach for urban co-operative banks (UCBs) to identify weaknesses in their operations early.

An early warning system with a stress-testing framework has been formed for timely recognition of weak banks for appropriate action, he added.

The RBI has approved formation of an ‘umbrella organization’ to provide liquidity, capital, IT and capacity building support to UCBs.

The Governor observed that the recent amendments in the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949 will facilitate RBI’s supervision processes with respect to NBFCs (non-banking finance companies) and UCBs, respectively.

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Published on July 11, 2020
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