After meeting a group of Punjab and Maharashtra Co-operative (PMC) Bank depositors in Mumbai on October 8, Finance Minister Nirmala Sitharaman said in a briefing today that the Reserve Bank of India (RBI) is taking action on the matter.
"Finance Ministry may have nothing to do with it (PMC bank matter) directly because RBI is the regulator," Sitharaman said.
Sitharaman said she would speak to RBI Governor Shaktikanta Das about the situation.
She also told depositors that the finance finance ministry is working with the rural development ministry, and she has asked secretaries from the concerned ministry to identify the shortcomings.
The Government will bring about necessary amendments with regard to legislation on cooperative banks during the Parliament's Winter Session, Sitharaman added.
PMC Bank depositors held protests outside the BJP's office at Nariman Point in Mumbai after a decision by the RBI where the cooperative bank was put under directions by (RBI) for six months.
When RBI puts a bank under its directions, it is practically taking over the bank's operations. The bank's management is superseded and the board is dissolved. This happens when the regulator is not satisfied with the bank's functioning and takes the step to safeguard the interest of borrowers.
In PMC Bank's case, it is said that the regulator found irregularities in lending. Under reporting of non-performing assets or higher than permitted exposure to same group accounts could have led RBI to take the step. An inspection is currently underway.
The RBI had put restrictions on withdrawals from PMC Bank on September 23, after it learned that the bank had been involved in financial irregularities and had also under-reported the loans it had doled out to real estate developer HDIL.
Initially, the transaction limit for PMC account holders was Rs 1,000, which was first increased to Rs 10,000, and is now Rs 25,000. That apart, the bank is not being allowed to lend or accept fresh deposits for the next few months.
(To be updated)
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