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In PMC bank mess, assume the worst
Updated On: 26 September, 2019 07:02 AM IST | Mumbai | Sucheta Dalal
Exclusive: With elections round the corner, will the RBI be prevailed upon to bypass rules and release insurance to depositors? Or will the central bank find a way to force those who got 'irregular' advances to return the money?
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The irony of a board declaring PMC Bank's 24-hour ATM is not lost on its account holders. Pic/Rudransh Sharma
On Tuesday morning, depositors of Punjab and Maharashtra Cooperative Bank (PMC Bank) woke up to news that they can withdraw only Rs 1,000 from their accounts, for the next six months. The harshness of RBI's action on a profitable, dividend-paying bank raises an important question: What is the Bank, and the banking regulator, hiding? How bad is the situation, that it warrants such draconian action and punishes the innocent and ordinary depositors so harshly?
Although PMC Bank is largely unknown outside Mumbai, it has a unique character and is very well known to senior central bankers. But more about that later. The Bank's customers are mainly small and medium businesses that will be devastated by RBI's seemingly thoughtless action at a time when almost every business is facing a liquidity squeeze and financial constraints. According to sources, one businessman who had just deposited R10 lakh to make payments to suppliers fainted on hearing that his money was frozen. When would such a draconian action be warranted that an administrator is appointed? Well, only if the accounts were totally fudged and its books cooked, like at Satyam Computers.
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