PMC Bank: Rs2,000 Crore in Deposits of Hundreds of Cooperative Housing Societies Stuck; Accounts Inoperative
Moneylife Digital Team 26 September 2019
The Reserve Bank of India (RBI)'s harsh restrictions on Punjab & Maharashtra Cooperative (PMC) Bank have hit hundreds of cooperative housing societies (CHS) very hard. This has affected their regular financial transactions until they are able to raise fresh funds from members. In some cases, there are issues with making regular payments for maintenance, support services and on-going work.
At several housing societies, fights have broken out between office bearers and members over the decision to have their funds in a single bank which happens to be PMC Bank.
PMC Bank's annual report, as on 31 March 2019, shows fixed deposits (FDs) worth Rs1,993.22 crore from cooperative institutions which, we understand, are mainly CHSs. In fact, fixed deposits by cooperative institutions form about one-third of total FDs in PMC Bank at Rs9,236.55 crore.
These cooperative institutions have saving bank deposits and current deposits worth Rs75.12 crore and Rs16.50 crore, respectively, in PMC Bank.
An office-bearer from a CHS in Badlapur says, one of our members had been asking question over the opening of a new account with some bank other than PMC Bank. “After the news that we cannot even withdraw Rs1,000 from our account, this member is making a big noise and threatening office bearers for failing to protect the interest of our CHSs. How we were expected to know that one fine day, PMC Bank would be put under restrictions by the RBI?” he asked helplessly.   
According to Section 70 of the Maharashtra Cooperative Societies (MCS) Act, cooperative societies in the state, including CHSs, can invest surplus funds with central cooperative banks, state cooperative banks and cooperative, as well as commercial, banks approved by the registrar of societies. 
In 2013, the 97th constitutional amendment was passed by the Parliament, allowing cooperative societies to invest funds in other banks under Article 43B to provide autonomy and under Article 243 ZI to facilitate professional management. There was a provision in the amendment to allow cooperative societies invest their funds in nationalised banks, scheduled banks and urban cooperative banks and not merely in the district central cooperative banks (DCCBs) and Maharashtra State Cooperative Bank (MSCB).
This allowed cooperative societies, mostly CHSs to have an account with a cooperative bank. Many of the CHS officer-bearers, who do the voluntary work, had chosen a bank that was close to their society or within reach. In many cases, since some of the officer-bearers would be from working class, they might have chosen a bank that has longer working hours and is open on most days of the week.
This is where PMC Bank scores very high. PMC Bank offers 12 hours uninterrupted service from 8am to 8pm at most of its branches, and 360 days banking, including on Sundays and holidays. 
However, with RBI suddenly deciding to put PMC Bank under restrictions, many of the cooperative societies, especially CHSs managed by its own members on voluntary basis, are finding it difficult to carry out day-to-day functions. Time for the government to interfere and save hundreds of CHSs from becoming defunct due to their locked money in PMC Bank. 
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Mohan Krishnan
5 years ago
All depositors should knock at the doors of RBI which is the headquarters of all financial terrorists in India. They have ample money to compensate all losers.
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