1 min read
. Updated: 19 Jun 2020, 06:00 PM IST
Edited By J. Jagannath
- The fraud at the bank came to light in September 2019
- RBI says Covid-19 affected the process of a resolution of the bank and hence the six-month extension to 22 December, 2020
The Reserve Bank of India on Friday extended restrictions on the beleaguered Punjab and Maharashtra Co-operative Bank for another six months to 22 December, 2020.
However, RBI has enhanced the withdrawal limit for the bank’s depositors to ₹1 lakh from the existing ₹50,000. With this relaxation, more than 84% of the bank’s depositors will be able to withdraw their entire account balance, said RBI.
RBI said in a press release that it has been engaging with the stakeholders to explore the possibility of a resolution of the bank but Covid-19 and “the continuing uncertainty around it” affected the whole process.
“Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges/limitations in resolution of the bank,” said the banking regulator.
The fraud at the bank came to light in September 2019 after the Reserve Bank of India found that the PMC Bank had allegedly created fictitious accounts to hide over ₹4,355 crore of loans extended to the almost-bankrupt HDIL.
According to RBI, the PMC Bank masked 44 problematic loan accounts, including of HDIL, by allegedly tampering with its core banking system, and the accounts were accessible only to limited staff members.
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