Money & Banking

PMC criss: Trade unions’ body to move Bombay High Court seeking 100 per cent relief for depositors

Our Bureau Mumbai | Updated on October 15, 2019 Published on October 15, 2019

Depositors gather outside PMC Bank’s Mahakali branch at Andheri, Mumbai, on Wednesday, to withdraw money   -  Vijay Bate

As things stand, depositors cannot withdraw more than ₹40,000 of the total balance in their accounts

The Trade Unions Joint Action Committee (TJAC) plans to move the Bombay High Court shortly, seeking 100 per cent relief for depositors whose savings are stuck in the troubled Punjab and Maharashtra Co-operative (PMC) Bank.

Vishwas Utagi, convenor, PMC Depositors’ Association, and co-convenor, TJAC (Maharashtra), said he will petition the court for return of depositors’ money without any haircut, and also seek upping of the deposit insurance cap of ₹1 lakh. He also wants the Centre to intervene and merge PMC Bank with State Bank of India.

PMC Bank was placed under the RBI’s directions for six months with effect from the close of its business on September 23 on account of major financial irregularities, failure of internal control and systems of the bank, and wrong/under-reporting of its exposures under various off-site surveillance reports.

As things stand, depositors cannot withdraw more than ₹40,000 of the total balance in their accounts during the period the bank is under directions. Under this withdrawal limit, about 77 per cent of the depositors of the bank will be able to withdraw their entire account balance.

Pointing out that the RBI has moved the alacrity in upping the deposit withdrawal limit from ₹1,000 per depositor to ₹10,000 (on September 26) to ₹25,000 (on October 03), and finally to ₹40,000 (on October 14), bankers don’t recollect any instance of the limits being enhanced so quickly.

Of the ₹11,617-crore deposits that the bank had as of March-end 2019, almost 80 per cent was in the form of term deposits (TDs). This is so because it offered attractive interest rate of 8 per cent for a two-year deposit at a time when large commercial banks were quoting 6.50-7 per cent interest.

Of the total TDs of ₹9,326 crore, about 78 per cent by value was held by individuals and others, and the balance was by co-operative institutions. PMC Bank has reportedly suffered a ₹4,335-crore loss due its alleged single large exposure to the bankrupt HDIL Group.

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Published on October 15, 2019
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