PMC Bank depositors survive on loans, charity

In February, 82-year-old Kishan Lal appealed to India’s finance minister for help, saying in a Twitter message he was ready to donate his kidney and eyes if someone could help arrange funds to treat his daughter, who had a brain tumour.

The Lals had enough savings to tide over the medical crisis—more than Rs 25 lakh in Punjab & Maharashtra Co-operative (PMC) Bank. But withdrawals are now capped at Rs 100,000 per depositor, up from Rs 50,000 earlier.

“I just borrowed money from wherever I could, I had to save my daughter,” said Lal. “If I had access to my own money, I’d not have been ashamed.”

The Reserve Bank of India (RBI) took control of PMC last September after it was accused of fraud and concealing non-performing loans. PMC’s top officials and the owners of a realty company that received the bulk of the loans were arrested.

The withdrawal cap has left many of PMC’s over

900,000 depositors in deep difficulty. Some say they are struggling to clear loans or pay their children’s school fees, while others say they depend on friends for their groceries.

The situation at PMC has also amplified concerns about the health of India’s tens of thousands of co-operative banks, which have assets worth around $220 billion, about

11 per cent of India’s total banking sector assets.

These banks, many of which are tiny, are subject to less stringent regulation than commercial banks and currently, over two dozen of them are facing lending or withdrawal restrictions by the RBI.

Asked about the delay in resolving PMC’s problems, Jai Bhagwan Bhoria, an administrator appointed by the RBI to revive the bank, told Reuters: “The recovery is an ongoing process and it takes time in actual realisations due to legal steps and hurdles faced.”

Many depositors said they were unaware of the differing regulatory structures for banks, and believed PMC was like any other commercial lender.

“If it was not safe, why did you name it a bank?” asked Pooja Chaudhary, 26, who said she had to struggle for hours last month to get custody of her father’s body after a hospital refused to release it until she cleared medical bills. “My father died, and I couldn’t even cry,” she said.