The Reserve Bank of India (RBI) is trying to find a workable solution in the Punjab and Maharashtra Cooperative (PMC) Bank matter as losses in the bank are very high and have eroded deposits by more than 50%, says RBI governor Shaktikanta Das. However, it has been almost 10 months since RBI has been trying to find out a workable solution in the PMC Bank crisis.
Speaking at the 7th Banking and Economic Conclave organised by State Bank of India, Mr Das, says, "With regard to the PMC Bank, the Reserve Bank is engaged with all stakeholders to find out a workable solution, as losses are very high, eroding deposits by more than 50%."
Last month, while enhancing withdrawal limit to Rs1 lakh for PMC Bank customers, the central bank had said that more than 84% of the depositors of the Bank will be able to withdraw their entire account balance.
Overall, this was the fifth time the central bank has increased the withdrawal limit after imposing the regulatory restrictions last year under the provisions of the Banking Regulation Act.
According to a statement, RBI has been engaging with the stakeholders to explore the possibility of a resolution of the Bank.
"However, the process has been affected due to the lockdown on account of corona virus (COVID19) and the continuing uncertainty around the pandemic. Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges or limitations in resolution of the bank."
"Nevertheless, consultation with various stake-holders and authorities for resolution of the bank is continuing. It is, therefore, considered necessary to extend the aforesaid Directions for a further period of six months to take the process forward," RBI had said last month.
The PMC Bank scam broke after Housing Development and Infrastructure Ltd (HDIL), a single borrower which accounted for 73% of PMC's loan book, went bankrupt.
HDIL, in collusion with PMC Bank executives, created thousands of fake customer accounts to re-route funds to itself.