RBI extends regulatory restrictions on PMC Bank by 3 months
The Reserve Bank of India (RBI) on Saturday further extended regulatory restrictions put on Punjab and Maharashtra Co-operative (PMC) Bank by three months till June 22, 2020.
In a circular, the Central Bank said it is closely monitoring the situation and has been holding regular meetings with the administrator and the advisory committee of the bank. It is also working a scheme for the revival of the bank.
“In the interest of depositors and stability of the cooperative banking sector, the Reserve Bank of India, in consultation with various stakeholders and authorities, is trying to work out a scheme for revival of the bank. In order to take this forward, it is considered necessary to extend the aforesaid directions for a further period of three months,” it said.
“The validity of directive dated September 23, 2019, as modified from time to time, has been extended for a further period of three months from March 23, 2020, to June 22, 2020, subject to review,” the circular added.
It could be noted that unlike in the case of commercial banks, the RBI has no powers to draw up an enforceable scheme of reconstruction of a cooperative bank.
The RBI had on September 24, 2019, imposed operational curbs on PMC Bank and ordered a freeze in its operations in the interest of depositors according to sections of the Banking Regulation Act, 1949.
The restriction included barring the bank from lending and accepting fresh deposits.
This was done after reports showed financial irregularities, failure of internal control and system of bank and wrong or under-reporting of its exposures.
The RBI also superseded the bank’s board and also appointed an administrator to take charge of the affairs.