On September 23, the RBI had put restrictions on Punjab & Maharashtra Cooperative (PMC) Bank after it had found out financial irregularities, and under-reporting of loans given to real estate developer HDIL.
Reserve Bank governor Shaktikanta Das on Friday said the banking system is sound and stable, and one incident at a cooperative bank should be used to generalise the health of the entire financial system. On September 23, the RBI had put restrictions on Punjab & Maharashtra Cooperative (PMC) Bank after it had found out financial irregularities, and under-reporting of loans given to real estate developer HDIL.
The curbs included barring the bank from lending and accepting fresh deposits for the next six months apart from capping withdrawals first at Rs 1,000 per account which was later revised upwards to Rs 10,000 and then again to Rs 25,000.
“So far as the RBI is concerned, I would like to make it very clear that the banking system remains sound and stable and there is no reason for any panic,” Das told reporters after the fourth bi-monthly monetary policy announcement. He was responding to a slew of questions on how RBI was caught napping as the scam at the leading cooperative bank was going on for around eight years and its exposure to HDIL was over 73 percent of its total book and that too the account had been an NPA for long. He also advised the people to not to pay much attention to unnecessary roumors that can create a panic situation.
On the MC scam, Das said the RBI acted very swiftly and promptly after it was brought to its notice. Maintaining that cooperative banks are also sound,he said, “one incident cannot be and should not be used to generalise about the health of all cooperative banks.” The RBI will review all the regulations of cooperative banks and will discuss with the government if required, he said.