Govt closely monitoring developments at PMC Bank, says Sitharaman

Finance Minister Nirmala Sitharaman during a press conference at the BJP office, in Mumbai, on Thursday. Photo: Kamlesh Pedneker

Finance Minister Nirmala Sitharaman on Monday said she is closely monitoring the developments at Punjab and Maharashtra Co-operative (PMC) Bank, and the RBI Governor has assured that customers' interest will be protected.

The bank was put under "directions" by the Reserve Bank of India (RBI) last month due to weak financial health, wherein the central bank has capped the deposit withdrawals at Rs 25,000.

"The RBI governor has assured me that he will keep the interest of customers in mind, and at the earliest try resolve and resolve it...I had discussion with RBI Governor this afternoon and I am closely monitoring it," she said while addressing media after meeting heads of public sector banks here.

PMC is in bad health allegedly due to its exposure to near-bankrupt realty player HDIL, to which it has loaned over 70 per cent of its Rs 9,000 crore in advances.

"Government has been on its toes in terms of bringing the assets of these promoters (indulged in fraud) of the bank...process will not suffer for want of enough assets which can eventually help paying back customers. In fact my appeal to Governor this afternoon was if there are so many assets, is there anyway RBI can expedite in terms of paying to customers who are genuinely suffering," she said.

She also said the government could consider raising deposit guarantee limit from existing Rs 1 lakh.

If it happens it will be through Parliament, she added.

Deposit Insurance & Credit Guarantee Corporation (DICGC) insures each depositor in a bank up to a maximum of Rs 1 lakh for both principal and interest as on the date of liquidation/cancellation of the affected bank's licence or from the date of amalgamation/merger.

She further said that she had discussion with the RBI Governor that if deposit guarantee of Rs 1 lakh can be released instantaneously.

But the governor informed that the deposit guarantee is released after the bank is closed and and when it is a going concern, she added.

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