RBI extends moratorium on PMC Bank till December 22; withdrawal limit capped at Rs 1 lakh

Providing no reprieve to the troubled customers of Punjab and Maharashtra Co-operative Bank (PMC) bank, the Reserve Bank of India, has extended the six-month moratorium on the bank by another six months till December 22, 2020. The Central Bank has also raised the withdrawal limit to Rs 1 lakh. PMC Bank's depositors have repeatedly protested against the RBI's decision to put a cap on the withdrawal.

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RBI extends moratorium on PMC Bank

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PMC Bank scam accused denied bail

Earlier in April, HDIL promoter Rakesh Wadhawan's bail in connection to the PMC Bank fraud was denied by a special court in Mumbai. Wadhawan had sought bail on medical grounds citing the Coronavirus. Wadhawan and his son Sarang - who were granted bail by a special court on March 30, but the order was delayed by the court for 8 weeks as the Economic Offence Wing (EOW) intervened.

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PMC Bank Scam

On September 21, the RBI took control of the government-run Punjab and Maharashtra Cooperative (PMC) Bank bank for six-months capping withdrawals at ₹1,000 per account and disallowing the bank to make any fresh loans for six months. Amid several depositors protesting in front of the government and the RBI, the withdrawal limit has been increased to Rs. 40,000. Moreover, the Supreme Court has also stayed the Bombay High Court order directing the sale of bankrupt HDIL to ensure repayment of dues and refused to the RBI-sanctioned limits on withdrawal. The Maharashtra government is mulling merging scam-hit bank PMC bank with Maharashtra State Co-operative (MSC) Bank and the RBI is yet to announce any scheme to revive the state-run bank.

After the takeover, PMC Bank had admitted that one large account-Housing Development and Infrastructure Ltd (HDIL) was the sole reason for the present crisis. Following this, the HDIL directors Sarang Wadhawan and Rakesh Kumar Wadhawan were arrested by the Mumbai Police's Economic Offences Wing and the ED in connection with a fraud of over Rs 4,355 crores. PMC Bank officials gave loans to HDIL between the year 2008 and August 2019 despite not paying the previous loans. Six depositors' deaths have occurred due to insufficient cash since then. 

PMC Bank, which had Rs. 11,500 crore deposited in its 137 branches, has already depleted to Rs 200 crores as Tax officials have asked to pay TDS. Meanwhile, the Central government has sought to improve the situation by introducing the Banking Regulation (Amendment) Bill, 2020 to strengthen cooperative banks by increasing professionalism, enabling access to capital, improving governance. Rakesh Wadhawan's nephews Kapil and Dheeraj Wadhawan - promotors of DHFL, are embroiled in the Yes Bank scam. 

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