Restrictions on embattled bank further extended until March end
By Amit Chettupuzha
MUMBAI/December 18-2020: The embattled Punjab and Maharashtra Cooperative Bank (PMC Bank) has received four proposals in response to the expression of interest (EoI) invited by the bank, the Reserve Bank of India said.
Meanwhile, the restrictions imposed on the bank dated June 19, 2020 up to December 22, 2020, has once again been extended until March 31, 2021.
Restrictions to continue
In September last year, RBI first imposed restrictions on this multi-state cooperative lender following financial irregularities, and deposit withdrawals were capped initially at Rs1000, which was subsequently raised to Rs1 lakh in a phased manner.
In November, the bank had invited expression of interest (EoI) from entities for acquiring the bank for which the last date for submission was December 15, 2020.
“The PMC Bank had invited Expression of Interest (EoI) from eligible investors for investment/ equity participation for its reconstruction. The bank has informed Reserve Bank that in response to EoI, four proposals have been received,” RBI said in a statement.
“These proposals will be examined by the bank with regard to their viability and feasibility, taking into account the best interest of the depositors. To undertake this process, the bank would need some more time,” the banking regulator stated further.
Option to convert into small finance bank
The potential investors will have the option to convert PMC Bank into a small finance bank, provided they meet the RBI’s licencing conditions. The lender will need RBI’s approval for such a conversion.
The bank’s total deposit base was Rs10,727 crore (Rs107.27 billion) as on March 31, while advances were at Rs4,473 crore. The bank reported a net loss of Rs6,835 crore for 2019-20.
PMC Bank’s net worth has turned negative, and it will need around Rs5,850 crore to bring it back to positive. The bank will need another Rs1,000 crore capital to maintain a minimum capital adequacy ratio of 9 per cent, which is the minimum stipulated for cooperative banks.
PMC Bank, a multi-state cooperative lender, has branch presence in Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh, with 137 branches.
