InvestorQ : Why has RBI again extended restrictions on PMC Bank?
Moii Chavate made post

Why has RBI again extended restrictions on PMC Bank?

Tisha Malhotra answered.
1 year ago

RBI on Friday extended restrictions on withdrawals and deposits in the PMC Bank till 30 June, a process that has been going on for nearly 18 months now. The RBI is currently working to finalize an investor for the cooperative bank, which went under burdened by a pile of bad loans. In September 2019, the RBI imposed restrictions on PMC Bank in after finding financial irregularities. RBI had appointed an administrator for the same.

The extension is due to the delay in finalizing a prospective investor for PMC Bank. The bank had actually received binding offers from certain interested investors in response to the Expression of Interest or EOI invitation put out in Nov-20. Currently, both PMC Bank and RBI are engaging with investors to get the best possible terms for the depositors. However, the financials of the bank have been compromised and could take more time.

When the RBI superseded the board of PMC Bank, the first thing it discovered was that nearly 73% of the bank’s books were exposed to the beleaguered realty firm HDIL, which is already facing stringent investigation by CBI and the ED. The bank had apparently given loans to the tune of Rs.6,500 crore to the HDIL promoters without informing the board members.