RBI Imposes Restrictions On PMC Bank For 6 Months; Only Rs 1,000 Per Account Can Be Withdrawn
Sep 25, 2019
Lawstreet News Network
Throwing the lives of thousands of traders, self-employed and daily wage earners into disarray, the Reserve Bank of India (RBI) has ordered Punjab and Maharashtra Co-operative (PMC) Bank not to do any business for six months and capped depositor withdrawals at Rs 1,000 per account.
“Depositors will be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance in every savings bank account or current account,” RBI said in a statement. The regulatory restrictions has been imposed on the bank under Section 35A of the Banking Regulation Act, 1949, for a period of six months due to irregularities disclosed to the regulator by the bank management.
The collapse seems to be shrouded in mystery as the bank management voluntarily approached the RBI to initiate the action instead of the regulator initiating the process which is the practice. As per reports, the reason for the sudden freeze ahead of the festival season is the surge in defaults in the past six months amid tight economic conditions and some lumpy loans to real estate companies located in the financial capital that turned sour, making it difficult for the bank to meet its commitments. The regulator has also appointed an administrator for the bank. Only savings of up to Rs 1 lakh is guaranteed To ease out the tension among the panicking customers, J.B. Bhoria, the RBI-appointed administrator specking to ET Now said: “I would like to tell the public that there is no need to get panicky because we have DICGC (Deposit Insurance and Credit Guarantee Corporation) cover through which deposits of up to Rs 1 lakh are covered. Besides, we have our own assets which are liquid. We are trying our best to sort out the situation. Prima facie there appears to be some NPAs, but I am told that they are all secured by the assets…” As per the DICGC rules, each depositor in a bank is insured up to Rs 1 lakh for both the principal and interest amount held by him. This includes all deposits held by you in your current account, savings account, fixed deposits and so on. If the total of all the deposits held by you exceeds Rs 1 lakh, then you will be able to get only up to Rs 1 lakh inclusive of principal and interest amount if the bank goes bankrupt. “I take responsibility and assure all the depositors that these irregularities will be rectified in six months. I know it is a difficult time for all of you. We assure (you) that we will definitely overcome this situation and stand strong,” the bank’s managing director Joy Thomas said in a message to depositors. PMC Bank, a cooperative bank with 137 branches and at least 51,000 members spread over seven states including Delhi and Punjab, has deposits of about Rs 11,617 crore, making it among the country’s top five urban co-operative banks. Its bad loans almost doubled to 3.76% of gross advances by March 2019, from 1.99% a year earlier. PMC Bank’s membership shrunk to 51,000 in March this year from 62,000 a year earlier. India’s deposit insurance cover lowest globally The 2018 annual survey by the International Association of Deposit Insurers (IADI) highlights the gnawing issue of low deposit cover in India vis-a-vis other countries. In India, bank deposits are insured by the Deposit Insurance and Credit Guarantee Corporation of India (DICGC) for up to Rs 1 lakh. This works out to about $1,407 (at the current conversion rate of Rs 71.05 to a dollar). This is far lower than the cover available in other countries, according to an IADI 2018 survey. In the US, the Federal Deposit Insurance Corporation offers insurance coverage of $250,000. Most of the countries cover 60-70 per cent of total deposits. Whereas, in India, only about 30 per cent of deposits in value terms are covered.
Google Pay App does not require RBI authorization as it is not a PSO but a third-party application provider: Google to HC
Google India Digital Services Pvt Ltd has told the Delhi High Court that its Google Pay app does not require RBI authorization as it is not a payment system operator (PSO) but a third-party application provider. Google, in an affidavit, has said the PSO authorized by the Reserve Bank of India (RBI) is the National Payment Corporation of India (NPCI) which is the owner and operator of the entire unified payment interface (UPI) network.The National Payments Corporation of India (NPCI) has said...
On Friday, 17th July 2020, the Federal Bank stated that it has received the approval of Reserve Bank of India for the reappointment of Shyam Srinivasan as Managing Director and Chief Executive Officer till 22nd September 2021. Shyam Srinivasan was appointed as MD and CEO of the Bank on 23rd September 2021. In a regulatory filing, Federal Bank informed Stock Exchanges that it received “RBI's nod on July 16, 2020, for the reappointment of Shyam Srinivasan as the MD and CEO of the bank, with...