Top priority to PMC depositors: RBI Governor to Finance Minister

Finance Ministry will ensure customers’ concerns are comprehensively addressed, tweets Sitharaman

Updated - October 12, 2019 11:08 pm IST

Published - October 12, 2019 10:57 pm IST - MUMBAI

People wait outside a PMC (Punjab and Maharashtra Co-operative) Bank branch to withdraw their money in Mumbai, India, September 25, 2019. REUTERS/Francis Mascarenhas

People wait outside a PMC (Punjab and Maharashtra Co-operative) Bank branch to withdraw their money in Mumbai, India, September 25, 2019. REUTERS/Francis Mascarenhas

Reserve Bank of India (RBI) Governor Shaktikanta Das has assured Union Finance Minister Nirmala Sitharaman of top priority to the concerns of the troubled customers of fraud-hit Punjab and Maharashtra Co-operative Bank.

The RBI Governor’s latest assurance for the customers — who cannot withdraw more than ₹25,000 from their accounts — was made to Ms. Sitharaman, who had already discussed the PMC Bank imbroglio with the RBI chief a couple of times and spoken to him afresh on the issue after meeting harangued bank depositors during her visit to Mumbai on Thursday.

“Spoken to RBI governor on the PMC Bank matter,” Ms. Sitharaman said in a post on Twitter on Saturday morning. “He assured me that clients and their concerns will be kept on top priority. I wish to reiterate that the Finance Ministry will ensure that customers’ concerns are comprehensively addressed. We understand the justified worries of the customers,” she added.

On Thursday, accosted by angry depositors ahead of a press conference at the BJP headquarters in Mumbai, the Finance Minister had agreed to meet them and hear their grievances. She had assured them at the time that she would have a fresh word with Mr. Das to try to expedite the lifting of restrictions on depositors from withdrawing more than ₹25,000.

In late September, the RBI had ordered the multi-State urban cooperative bank to stop all business activities for six months and capped withdrawals at ₹ 1,000, a limit that was subsequently raised to ₹10,000 and further enhanced to ₹25,000 on October 3. The ₹25,000 limit, the RBI had said, would allow 70% of the bank’s depositors to withdraw their entire balance.

‘Expedite permission’

“I shall request the RBI Governor to expedite the permissions for withdrawal of their money. I can only emphasise this has to be done fairly quickly in view of the urgency and distress faced by customers,” Ms. Sitharaman had said on Thursday.

The restrictions imposed on PMC Bank had spread panic regarding the safety of public savings in other cooperative as well as public sector banks, forcing the RBI to step in twice to scotch rumours and reassure depositors about the safety and stability of the Indian banking system.

Concerned about a contagion effect on public trust in cooperative banking in particular, the finance ministry has also set up a committee that includes the Banking Secretary, Economic Affairs Secretary and a Deputy Governor of the RBI, to examine the regulatory structure for cooperative banks to prevent a relapse of PMC-like incidents.

“If the amendments are going to help us curb malpractices, with better regulation and empowerment of the regulator, then we would like to do that. Necessary legislative steps will be taken to prevent such things from happening again in future and empower the regulator even better, if there are shortcomings,” Ms. Sitharaman said on Thursday, promising necessary changes in the forthcoming winter session of Parliament.

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