RBI extends curbs on PMC Bank till 30 June

Reserve Bank of India (RBI) has extended restrictions on withdrawals and deposits in Punjab & Maharashtra Cooperative (PMC) Bank till 30 June, 2021. This decision was taken as central bank is working to finalize an investor for scam-hit multi-state cooperative bank.

Background

Reserve Bank of India had imposed restrictions on Punjab & Maharashtra Bank Cooperative Bank in September 2019 after it came across financial irregularities in the bank. Following that, RBI had curbed all activities of PMC Bank. It also appointed an administrator for next six months and limited withdrawals from accounts of the customers. The restrictions were to expire on March 31, 2021.

Why date was extended?

Reserve Bank of India has extended restrictions following a delay in finalizing prospective investor for PMC bank. It had received binding offers from certain investors to reconstruct with respect to Expression of Interest.

What is the issue?

PMC Bank is undergoing regulatory actions and investigation over alleged irregularities in certain loan accounts particularly, the loans given to financially stressed real estate player Housing Development & Infrastructure (HDIL). Crisis in the bank first came to light in September 2019 following which RBI placed curbs on the activities of bank for six months. RBI also limited the amount a customer could withdraw from their account to Rs 1,000 first and later to Rs 25,000. Enforcement Directorate has also filed a money laundering case on PMC Bank scam.

About PMC Bank

PMC bank was founded in 1984. It has 137 branches across seven states. 81 branches are located in Thane, Mumbai, Navi Mumbai, and Palghar regions.  10 are in Pune while 12 in rest of the regions in Maharashtra. Small businesses, housing societies and institutions are its primary customers.

Month: Current Affairs - March, 2021