The issue of depositors being denied access to their funds has led to widespread protests by them and has turned into something of a political hot potato ahead of the Assembly elections in Maharashtra.
The Reserve Bank of India (RBI) on Monday raised the withdrawal limit for depositors of Punjab & Maharashtra Co-operative (PMC) Bank to `40,000 from `25,000. The beleaguered urban co-op bank saw its board suspended on September 23 and an RBI-appointed administrator taking charge amid allegations of fraud and fund diversion.
“With the above relaxation, about 77% of depositors of the bank will be able to withdraw their entire account balance,” the central bank said in a statement.
The RBI also said based on a complaint filed by the bank against its officials and borrowers associated with the fraud/financial irregularities in the bank and manipulation of its books of accounts, the Economic Offences Wing, Maharashtra Police has started investigations into the matter. “Further, forensic auditors have been appointed by the administrator of the bank to look into related transactions. The administrator and the three-member advisory committee appointed by the RBI in terms of Section 36AAA(5)(a) read with Section 56 of the Banking Regulation Act 1949 are working for speedier resolution of various issues being faced by the bank in conducting its operations,” the RBI said.
The issue of depositors being denied access to their funds has led to widespread protests by them and has turned into something of a political hot potato ahead of the Assembly elections in Maharashtra. In what could be seen as an attempt at damage control, finance minister Nirmala Sitharaman on Saturday said she had spoken to the RBI governor, who had assured her that customers’ concerns will be treated as a top priority.
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“Spoken to governor @RBI on the #PMCBank matter. He assured me that clients & their concerns will be kept on top priority. I wish to reiterate that @FinMinIndia will ensure that customers concerns are comprehensively addressed. We understand the justified worries of the customers,” she said in a tweet.
On Monday, Sitharaman said the process of resolving the crisis at the bank will not suffer for want of assets which can eventually help pay back customers. “In fact, my appeal to governor (of RBI) this afternoon was if there are so many assets, is there anyway RBI can expedite in terms of paying to customers who are genuinely suffering,” she said. The FM added the government could consider raising the deposit guarantee limit from the existing `1 lakh through Parliament.
PMC Bank’s exposure to the Housing Development & Infrastructure (HDIL) Group was in excess of the RBI’s prescribed limits for single-group exposure, Joy Thomas, suspended chief executive of the bank, had said on September 27. Non-reporting of these loans over a period of about seven years and eventual defaults on them have precipitated the current crisis at PMC Bank.