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Punjab and Maharashtra Cooperative (PMC) Bank's customers see the decision passed by Reserve Bank of India (RBI) to turn PMC bank into a small finance bank as a positive step. However, they still feel this could be another delay to revive the troubled bank.

The Reserve Bank of India (RBI) today granted in-principle approval to Centrum Financial Services to set up a small finance bank, which means that Centrum Financial Services will takeover troubled PMC Bank.

A former banker and an affected PMC customer, TK Paul alleged, “This is nothing but another way to delay the whole process and denying customers their money. RBI has already delayed the process and now it is delaying it further.”

Being a retired banker, he knows the banking process in and out, he claimed. “All depositors' money is held in the bank. And these funds are used to maintain the expenditure of a troubled bank at some point those funds will dry. So, time is of essence in this case.” The bank registered a net loss of Rs 6,835 crore during 2019-20 and has a negative net worth of Rs 5,850.61 crore as of March 31, 2020.

Reiterating Paul’s words is Tanisha Jain, yet another PMC customer, “The takeover and SFBs were some of the early suggestions given to RBI. The question is why did the RBI take so long to act.”

On September 23, 2019, the RBI had superseded the board of the bank and placed it under various regulatory restrictions after the detection of certain financial irregularities.

Jain, who feels the whole process has taken a toll in her life, said, “Over the last two years, many PMC customers have died. It was a sad state. It is depressing to know the state of some PMC customers, who were struggling as their whole life savings were stuck.”

Even though Jain is optimistic, she still has a doubt about this whole process. “I cannot believe the authorities anymore. I will only believe when I get my money from the bank. Until that day I still believe the whole process is another delay.”

An advocate and also a PMC customer, Pooja Mali stated, “Today’s step may be in the right direction, but the process has already been delayed. However, the question now will be what is next. We do not know what are the terms at which the RBI is allowing this takeover.”

Mali thinks unless the terms are not clear, it is still a black hole for customers. She added Rs 5 lakh (insured deposits) to depositors under the provisions of the DICGC Act, 1961 is there. But what happens to depositors who have deposited more than that, she quizzed.

On November 3, 2020, AK Dixit, PMC Bank’s Administrator, in a letter to customers and stakeholders, said the bank had issued express of interest (EoI) inviting investors for the revival/ reconstruction of PMC Bank. Centrum Financial Services was selected among more than three bidders.

According to the EoI, PMC Bank was having total deposits of Rs 10,727.12 crore, total advances of Rs 4,472.78 crore and gross NPA (non-performing assets) of Rs 3,518.89 crore as on March 31, 2020.

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Free Press Journal