PMC Bank collapse: Congress terms it ‘systematic’ failure of RBI

PMC Bank collapse: Congress terms it ‘systematic’ failure of RBI

Agency News

New Delhi, Sep 27 : The Indian National Congress (INC) on Friday blamed the Reserve Bank of India over the recent crisis in Punjab and Maharashtra Cooperative Bank where in the account holders are not allowed to withdraw more than Rs 10000 for next six months.

"One can't withdraw his own money. Who's doing this? RBI. This is a complete systematic failure from RBI" INC spokesperson Prof. Gourav Vallabh said. Mr Vallabh pointed out about the warning signals that RBI tracks for all institutions that can have trouble in future.

"Why did RBI not track early warning signals? Were they not working effectively or were the early warning signals being overlooked?", he said adding that the PMC bank has also Fixed Deposits from other banks. "If you don’t release this money, it'll have a cascading impact on other small cooperative banks." Vallabh said.

The Congress party also raised a sharp attack on the Bhartiya Janata Party (BJP) by claiming that the PMC bank Director Rajneet Singh is having close ties with BJP. Ranjeet Singh is son of four-time BJP MLA from the Mulund constituency.

Vallabh noted that on March 31, this year, this bank reported a net profit of Rs 100 crores. "This bank’s Rs 615 crore is lying with the RBI as a deposit, despite that the RBI says it will not give more than Rs 10,000", he questioned adding "the Gross NPAs of this bank is 3.7 per cent and net NPA is 2.1 per cent, less than the average of the banking sector. Then what went wrong?"

The 35-year old Punjab & Maharashtra Co-operative Bank is a Multi-State Scheduled Urban Co-operative Bank with its area of operation in the States of Maharashtra, Delhi, Karnataka ,Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. The Bank has a wide network of 137 branches across six states and is considered among top 10 co-operative banks of the country.

RBI on Sept 23 had disallowed this bank from carrying out banking activities for next six months as it found certain irregularities in the bank including under reporting of NPAs. The account holders were only allowed to withdraw Rs 10000 -- creating panic among its customers. (UNI)