The Reserve Bank of India (RBI) has extended the restrictions on Punjab and Maharashtra Cooperative (PMC) Bank till June 30, 2021. The decision has been taken in the backdrop of financial condition of the bank which is likely to make the reconstruction process complex and time-consuming, the central bank said in a notification on Friday.
“PMC Bank had received binding offers from certain investors for its reconstruction, in response to the Expression of Interest (EOI) dated November 3, 2020, floated by the bank. RBI and PMC Bank are presently engaging with prospective investors in order to secure best possible terms for the depositors and other stakeholders while ensuring long term viability of the reconstructed entity,” RBI said.
The RBI had put PMC Bank under all-inclusive directions under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949, on September 23, 2019, to protect depositors’ interests. The action came after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL. The restrictions were further extended on December 18, 2020, up to March 31, 2021.
Last month, RBI Governor Shaktikanta Das had disclosed that three investors have submitted their offers for reconstruction of PMC Bank and evaluation for those are underway. In January this year, PMC Bank administrator A K Dixit in a letter to customers and stakeholders had informed that three prospective investors were given time till February 1, 2021 for submission of their final offer.
“Given the financial condition of the PMC Bank, the process is complex and is likely to take some more time. In the circumstances, it is considered necessary to extend the aforesaid directions,” RBI said.
“Accordingly, it is hereby notified for the information of the public that the validity of the aforesaid Directive dated September 23, 2019, as modified from time to time, has been extended for a further period from April 1, 2021 to June 30, 2021, subject to review. It may be clarified that the process of reconstruction will be commenced as soon as the aforesaid objectives are achieved to the best possible extent,” the central bank further added.
The terms and conditions of the directives will remain unchanged, RBI clarified.