Large withdrawals led to RBI’s curbs on PMC Bank
Large withdrawals of deposits from Punjab & Maharashtra Co-operative Bank (PMC Bank) in a span of two-three days forced the Reserve Bank of India (RBI) to put curbs on the troubled bank, according to a person aware of the matter.
These withdrawals, which started on September 19, amounted to more than 5% of total deposits on some days, the person said on condition of anonymity.
These large-scale withdrawals prompted the central bank to step in and place restrictions on September 23.
The identity of the depositor (or depositors) withdrawing large sums or the exact quantum of deposits withdrawn during this period could not be ascertained and will be disclosed once the central bank completes its inspection. PMC Bank’s total deposit base stood at over ₹11,500 crore at the end of March 31.
“Financial irregularities including deposit erosion beyond a certain level would trigger directions being imposed on banks,” said the same person.
Last week, RBI allowed depositors to withdraw as much as ₹10,000 from their accounts, after initially saying they could withdraw only up to ₹1,000. The new limit will allow 60% of the bank’s depositors to withdraw all of their money.
Meanwhile, there have been fresh revelations about the collapse of board-level governance at the cooperative bank, especially regarding out-of-turn favours shown to Housing Development & Infrastructure Ltd (HDIL).
On Sunday, citing a letter written by PMC Bank’s suspended managing director and chief executive officer Joy Thomas, news agency PTI reported that the bank’s actual exposure to the bankrupt real estate developer is over ₹6,500 crore—four times the regulatory cap or a whopping 73% of its entire assets of ₹8,880 crore.
The Mumbai Police on Monday filed a case against the ousted management of PMC Bank and the promoters of HDIL.
The economic offences wing of the police registered a case on charges of forgery, cheating and criminal conspiracy. A special investigation team will probe the case, it said.
“The accused bank officers, in connivance with (executives from) HDIL, intentionally concealed information from the RBI on NPAs. The accused also created false small loan accounts with bogus documents and submitted the same with the RBI to cover up their irregularities,” said an EOW officer.