The bank allegedly violated RBI norms by extending loans to HDIL beyond permissible limits. (Express file photo)
In an effort to provide some relief to depositors of the scam hit Punjab and Maharashtra Cooperative (PMC) Bank, the state government has mooted a proposal for the amalgamation of the bank with the Maharashtra State Cooperative (MSC) Bank.
“We are trying to see if the MSC Bank can take over the PMC, which will ensure that all the depositors can benefit. I have had discussions with the MSC Bank chairman on this issue and he told me he is working on it. We will request and send the Reserve Bank of India a letter seeking the amalgamation of the two banks,” said Cabinet Minister Jayant Patil.
The PMC Bank has been put under restrictions by the RBI, after an alleged Rs 4,355 crore scam came to light, following which, the deposit withdrawal was initially capped at Rs 1,000, causing panic and distress among depositors. The withdrawal limit was subsequently raised to Rs 50,000. Almost 74 per cent of PMC Bank’s advances went to just one group — Housing Development Infrastructure Ltd (HDIL), promoted by Rakesh Wadhawan — that has since become a non-performing asset and precipitated the unfolding crisis.
“We want to assure the PMC Bank depositors that the government stands with them. The merger of the two banks will definitely help small depositors,” Patil said.
On whether the MSC Bank was in a position to takeover the burden of PMC, Patil said the financials of MSC Bank were sound.
Nearly 16 lakh depositors of the PMC Bank were left in the lurch when the RBI placed the bank under an administrator due to its precarious financial condition and under reporting of non-performing loans.
Twelve people, including top officials of PMC Bank and HDIL, have so far been arrested by Mumbai Police’s Economic Offences Wing (EOW) in connection with the scam.