The Reserve Bank of India has decided to extend the restrictions imposed on the Punjab and Maharashtra Cooperative(PMC) bank by 6 months from July 1 to December 31, 2021. The decision was revealed by the banking regulator in a press release issued on Friday.
The multi-state cooperative bank has been riddled with crisis since September 2019, when the Reserve Bank superseded PMC’s board citing irregularities in its loan book. Recently, a proposal by Centrum Financial Services and BharatPe was given an in-principal approval by the regulator to take over the PMC Bank. The consortium has been given a time of 120 days to set up a small financial bank which would later be merged with the PMC Bank.
“Taking into account the time required for completion of various activities involved in the process, it is considered necessary to extend the aforesaid Directions,” RBI said in its circular.
“In the interest of depositor protection,” the central bank had on September 23, 2019, placed restrictions on the PMC Bank under Sub-section (1) of Section 35-A with Section 56 of the Banking Regulation Act, 1949. Among other things, restrictions were placed on customer withdrawals, causing great hardship to depositors of the bank. The restrictions were last extended on March 26 earlier this year.
On account of fraud committed by the bank’s management, its financial’s have been left in dire condition. PMC Bank recorded a net loss of Rs.6,835 crore for the financial year 2019-20. The net worth of the cooperative bank is negative Rs.5,850.61 crore and it faces a gross NPA of 3,518.89 crores.