RBIs restriction on PMC bank EXPLAINED; here’s why customers can’t withdraw more than Rs 1,000

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Published: September 26, 2019 10:09:14 AM

The bank came under RBI’s scanner after irregularities were disclosed. RBI’s current restrictions on the bank will be in force for six months.

Customers outside a PMC Bank branch in Mumbai on Tuesday (Express photo: Narendra Vaskar)Customers outside a PMC Bank branch in Mumbai on Tuesday (Express photo: Narendra Vaskar)

Punjab and Maharashtra Cooperative Bank Ltd (PMC Bank), one of the leading cooperative banks in the country, was curbed by RBI on Tuesday owing to various irregularities found in the bank’s conduct. The move left thousands of depositors in a state of frenzy as customers rushed to the bank’s branches across Maharashtra. However, they were unable to withdraw more than Rs 1,000 from savings bank account or current account or any other deposit account. The bank, which has a deposit base of over Rs 11,000 crore, was being milked by real estate players in collaboration with bank officials. Troubled realty player HDIL, which has been declared a defaulter by commercial banks, led the pack and was funded by PMC.

While the bank reported a net profit of Rs 99.69 crore in 2018-19 as against Rs 100.90 crore in FY18, it was later found that PMC bank had not disclosed the sticky assets and under-reported them. The bank’s bad loans could be soaring to Rs 2,000-2,500 crore. The same was not flagged by the auditor of the bank but RBI has been tough because of previous instances of bad loan reporting.

Rakesh Kumar Wadhawan, the Chairman of HDIL and his son Sarang Wadhawan, Vice Chairman and MD were given loans by PMC even after the company defaulted on loans by other banks. PMC Bank’s Managing Director Joy Thomas on Wednesday went on record to admit the same. However, according to Joy Thomas, PMC given loan to HDIL was not Rs 2,500 crore, as was said in the media.

The 1984-founded bank has several small businesses, housing societies and institutions as its customers and ranks among the top 10 cooperative banks in the country. The bank came under RBI’s scanner after irregularities were disclosed. RBI’s current restrictions on the bank will be in force for six months. For now, the PMC bank has been restricted to grant or renew loans or make fresh investments.

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