PMC Bank crisis: RBI supersedes the board, appoints administrator as PIL challenges curbs on withdrawal

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September 30, 2019 10:10 PM

Punjab & Maharastra Cooperative Bank Crisis: The RBI has appointed Jai Bhagwan Bhoria as the administrator of the bank with all the powers of the bank's board.

PMC Bank, Punjab & Maharashtra Cooperative Bank, HDIL, RBI, Anurag ThakurA PIL in Bombay high court has been filed against the restrictions imposed by the RBI.

PMC Bank Crisis: In its bid to contain the crisis in Punjab and Maharastra Cooperative Bank, Reserve Bank of India last week superseded the troubled bank’s board and appointed Jai Bhagwan Bhoria as the administrator of the bank. Though the decision was taken by the RBI last week, the Union government confirmed the news today evening. Reserve Bank has granted Mr Bhoria all the powers of the bank’s board. The alleged irregularities in the bank came to the fore last week when the Reserve Bank of India restrained the bank from doing business activities for six months and capped the withdrawal by the depositors at Rs 1,000 a day. It sent shockwaves through the banking sector as the bank was catering to small depositors, and the curbs imposed by the RBI stoked the apprehension of another major scam in the country’s banking sector.

The RBI later eased the restrictions by increasing the withdrawal limit from Rs 1,000 a day to Rs 10,000 a day.

Earlier in the day, in a related development, Anurag Thakur, minister of state for the finance, termed the development an ‘eye-opener’, indicating that it was due to lapses on the part of auditors.

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“The kind of media reports and articles have come, some of them are very shocking. I think it is very-very important, an eye-opener for the banking sector,” said Anurag Thakur.

Anurag Thakur’s response on the sidelines of a function organised by Punjab National Bank highlighted the deep mess the bank was in. A PTI report said that a large part of PMC Bank’s advances were linked to just one borrower – Housing Development and Infrastructure Limited (HDIL), a non-banking finance company that is facing bankruptcy proceedings.

“The role of regulators is very important but at the same time, the role of auditors, directors and bank officials is equally important. And what they have been doing for last so many years and people responsible for it. I think the regulator (RBI) is looking into this. At this stage, I would not like to say much to that,” he said.

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Anurag Thakur’s statement comes on the day when a public interest litigation (PIL) was filed in Bombay High Court challenging the RBI’s restrictions on the crisis-hit Punjab and Maharashtra Cooperative Bank.

A Mumbai based NGO Consumer Action Network and some other depositors filed the PIL against the RBI’s circular of September 23, when it barred the bank from taking fresh deposits and extending new loans. The RBI also imposed a cap of Rs 1,000 a day for the next six months on the withdrawal by depositors.

However, on September 26, the RBI had increased the cap on withdrawal limit from Rs 1,000 to Rs 10,000 per day.

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