Curbs on PMC Bank to continue till December, says RBI

The cash withdrawals were initially capped at Rs 1,000 per account for six months, but gradually relaxed to Rs 1 lakh in June last year.

Reserve Bank of India (RBI) on Friday said a proposal from Centrum Financial Services (CFS) and BharatPe to reconstruct PMC Bank (Punjab and Maharashtra Co-operative Bank) was “feasible”. The regulator extended the restrictions on the co-operative bank until December; by then the resolution process for the troubled lender is expected to be completed.

On June 18, the regulator gave CFS an in-principle nod to set up a small finance bank (SFB), saying the approval had been given specifically with regard to the latter’s response to the EoI or expression of interest from PMC on November 3, 2020.

BharatPe group president Suhail Sameer has said CFS and BharatPe would together infuse capital to the tune of Rs 1,500-3,000 crore into the SFB. As per the EoI document released in November 2020, investors needed to bring in capital to enable the bank to achieve the mandated minimum capital to risk weighted assets ratio (CRAR) of 9%.

In September 2019, RBI had put stringent curbs on PMC Bank, including on cash withdrawals by depositors following a probe into accounting lapses. The cash withdrawals were initially capped at Rs 1,000 per account for six months, but gradually relaxed to Rs 1 lakh in June last year.

PMC posted a net loss of Rs 6,835 crore in FY20, reporting a negative net worth of Rs 5,850.61 crore, as per the bid document.