PMC Bank crisis: RBI extends regulatory restrictions by 3 months
The Reserve Bank of India (RBI) announced on Saturday that it had extended regulatory restrictions on the Punjab and Maharashtra Cooperative (PMC) Bank by three months until June 22, 2020.
The RBI had imposed a six-month regulatory restriction on the bank on September 23, 2019, after discovering certain financial irregularities, cover-up and misrepresentation of loans made to property developer HDIL.
“It is hereby notified for the information of the public that the validity of the Directive dated September 23, 2019, as amended from time to time, has been extended for a further period of three months from March 23, 2020 to 22 June, 2020, subject to review, “the RBI said in a statement.
It can be noted that unlike commercial banks, the RBI does not have the power to draw up an enforceable scheme for the reconstruction of a cooperative bank.
“Nonetheless, in the interest of depositors and the stability of the cooperative banking sector, the RBI, in consultation with various stakeholders and authorities, is attempting to develop a plan to revive the bank,” the statement said.
The restriction on PMC included banning the bank from lending and accepting new deposits.
The RBI also replaced the bank’s board and management and appointed a former RBI official as the bank’s administrator.
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