Interest of Depositor Is Highest Priority Says RBI Governor

New Delhi, October 4:Ever since the news broke out that the RBI has placed Mumbai-based Punjab and Maharashtra Cooperative bank under direction, the customers of Punjab National Bank got jittery. Now allaying the fear of customers of the bank, RBI Governor Shaktikanta Das, on Friday, said that in PMC Bank case the interest of depositor is highest priority. He also added every case is unique and based on the PMC Bank case facts; we have acted as soon as it came into light.

While briefing media, Das threw light on PMC bank case and said: “Every such incident (PMC Bank issue) is an experience and we will have a fresh look at the regulatory framework (for cooperative banks) and if any change is needed, we will discuss it with the government.”

According to the RBI’s directions, which will be in force for six months, without a prior written approval, PMC Bank cannot grant or renew any loans and advances, make any investment, and incur any liability, including borrowing funds and accepting fresh deposits.

The RBI has earlier capped withdrawals at Rs 1,000 per customer for the six-month period. The regulator, however, said the issue of the directions should not be construed as a cancellation of the banking licence. Which was then relaxed to 10,000 in two days.

"The Reserve Bank of India again reviewed the bank’s liquidity position and, with a view to reducing the hardship of the depositors, has decided to further enhance the limit for withdrawal to Rs 25000," RBI said in a press release.

As of March 2019, PMC Bank had outstanding deposits of Rs 11,600 crore, of which demand deposits were nearly Rs 2,300 crore and the balance were term deposits.

In annual report of the bank, PMC Bank’s advances stood at Rs 8383 crore as of March 2019, an increase of about 13 per cent over the previous year. The bank also has tie-up with National Housing Bank (the Nodal Agency) to provide Credit linked subsidy scheme – Pradhan Mantri Awas Yojana (PMAY). In FY19, a total amount of Rs 3.69 crore of subsidy claims was settled by NHB under the scheme. The bank has Rs 984 crore exposure to advances against real estate, construction and housing.

In the annual report, the bank has highlighted that its stressed assets had gone up during the fiscal and the bank had sold bad loans to CFM Asset Reconstruction for Rs 105 crore.

The bank had a bad loan book (GNPA) of Rs 148 crore in the beginning of FY19, which exponentially rose to Rs 315 crore (3.76 per cent of loans) by the end of the fiscal, reducing the bank’s profit by 1 per cent to Rs 99 crore in FY19.