The Reserve Financial institution of India (RBI) on Friday stated it has prolonged restrictions on withdrawals and deposits within the scam-hit Punjab and Maharashtra Cooperative (PMC) Financial institution until June 30, 2021.
The RBI had imposed restrictions on the multi-state cooperative financial institution in September 2019 after detecting monetary irregularities. The RBI curbed all actions of PMC Financial institution, and appointed an administrator for the subsequent six months.
The restrictions, together with cap on withdrawal of cash from clients’ accounts, had been set to run out on March 31, 2021.
The extension comes after the delay in finalising a potential investor for the financial institution. PMC Financial institution had obtained binding provides from sure traders for its reconstruction, in response to the Expression of Curiosity (EOI) dated November 3, 2020.
“The RBI and PMC Financial institution are presently participating with potential traders with a view to safe very best phrases for the depositors and different stakeholders whereas making certain long run viability of the reconstructed entity. Given the monetary situation of the financial institution, the method is complicated and is prone to take some extra time,” stated the RBI in its assertion.
“It could be clarified that the method of reconstruction shall be commenced as quickly because the aforesaid goals are achieved to the absolute best extent,” the RBI added.
After superseding the board of the financial institution, the RBI discovered that just about 73% of the financial institution’s complete mortgage e book dimension of ₹8,880 crore as of September 19, 2019, was uncovered to actual property agency Housing Growth and Infrastructure Ltd (HDIL).
In an alleged confession letter to the RBI, the financial institution’s managing director and chief govt officer Pleasure Thomas had accepted giving loans to HDIL and its associated entity to the tune of ₹6,500 crore with out informing all of the board members. Thomas was later arrested.
Initially, the RBI had allowed depositors to withdraw ₹1,000 which was later raised to ₹1 lakh per account to mitigate their difficulties.