Finance Minister Nirmala Sitharaman has assured depositors of the crisis-hit PMC Bank that she will resolve their problem by talking to the RBI governor.
Finance Minister Nirmala Sitharaman said on Tuesday that she will address the concerns of the depositors of the failed Punjab and Maharashra Cooperative (PMC) Bank. She said that she will speak to the governor of the Reserve Bank of India for an early resolution of the problem.
It is important to note that the issue came to light after the PMC bank was put under “directions” by the apex bank. The RBI capped the deposit withdrawals at Rs 25,000 due to weak financial health. Although 75 per cent of the depositors withdrew their money, others who trusted the bank with their savings were stuck.
Notably, the lender allegedly loaned over 70 per cent of its Rs 9,000 crore in advances to the near bankrupt Housing Development and Infrastructure Ltd.
The Finance Minister said that the government is considering amending laws for better regulation of cooperative banks. “The finance ministry may have nothing to do with (PMC Bank issue) directly because RBI is the regulator of cooperative banks,” she said. “But, I’ve asked the secretaries of my ministry to work with the rural development ministry and urban development ministry to study in detail as to what is happening,” she added.
The Finance Minister further said that there are more ways to empower the central bank and those measures are being considered. Significantly, this crisis has raised questions about the limitations in cooperative bank supervision. This is because the lender managed to concentrate 70 per cent of its lending to a singer borrower HDIL, despite being on the core banking platform.