PMC Bank restrictions extended by 3 more months; RBI says bank needs more time for reconstruction

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Updated: December 18, 2020 6:45 PM

RBI said that the PMC Bank will need more time to undergo the reconstruction process.

Meanwhile, the regulator has also extended the restrictions placed on PMC by three months till March 31, 2021, until the proposals are studied.Meanwhile, the regulator has also extended the restrictions placed on PMC by three months till March 31, 2021, until the proposals are studied.

The Reserve bank of India has further extended restrictions of Punjab and Maharashtra Cooperative Bank (PMC Bank) by another three months. RBI said that it is considered necessary to extend the directions, keeping in view the best interest of all stakeholders. The restrictions will now be imposed till 31 March 2021, instead of  23 December 2020. The RBI further said that all other terms and conditions of the Directives under reference shall remain unchanged. PMC bank was placed under restrictions with effect from 23 September 2019, and the directions were last extended on 19 June 2020, up to 22 December 2020.

The PMC Bank had invited Expression of Interest (EoI) from eligible investors for investment or equity participation for its reconstruction, for which the last date for submission of EoI was 15 December 2020. The RBI further said that in response to the EoI, four proposals have been received. These proposals will be examined by the bank, on the basis of their viability and feasibility, taking into account the best interest of the depositors. The central bank underlined that the bank would need some more time to undertake this process.

Last year, the RBI detected certain financial irregularities, and hiding and misreporting of loans given to real estate developer HDIL. It’s exposure to HDIL was over Rs 6,500 crore or 73 per cent of its total loan book size of Rs 8,880 crore as of 19 September 2019. Initially, the RBI had allowed depositors to withdraw Rs 1,000 which was later raised to Rs 1 lakh per account to alleviate their difficulties.

Meanwhile, during the last fiscal year 2019-20, the PMC Bank had registered a net loss of Rs 6,835 crore and had a negative net worth of Rs 5,850.61 crore. The proposal to invite investors for the bank stated financial institutions, including banks and NBFCs; and individuals or group of individuals or companies, societies, trusts, or any other such entities having adequate net worth, eligible for investment.

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