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Business News/ Elections 2019 / Assembly Elections 2019/  PMC crisis turns into a key poll plank in Maharashtra
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PMC crisis turns into a key poll plank in Maharashtra

At poll rallies, Opposition parties urge Centre to come to the aid of affected customers
  • Manmohan Singh, while campaigning for polls, seeks the intervention of Modi to defuse the crisis
  • At least three account holders have so far died in Mumbai, after RBI put restrictions on PMC Bank. (Reuters)Premium
    At least three account holders have so far died in Mumbai, after RBI put restrictions on PMC Bank. (Reuters)

    MUMBAI:What started as a financial fraud at Punjab and Maharashtra Co-operative (PMC) Bank is fast becoming a key election issue in Maharashtra, which goes to polls on 21 October. Former Prime Minister and Congress veteran Manmohan Singh who was campaigning in the state on Thursday sought the intervention of Prime Minister Narendra Modi to defuse the crisis, which he said, was depriving depositors of their life-savings.

    Speaking at an event in Mumbai on Thursday, Singh appealed to the PM, Maharashtra chief minister Devendra Fadnavis and finance minister Nirmala Sitharaman to come to the aid of the depositors. “The Prime Minister should use National Relief Fund to help PMC Bank sufferers especially those who are having health issues," Singh said.

    “I appeal to the chief minister of Maharashtra, the Prime Minister and the finance minister to look into this matter and resolve the grievances of the affected 16 lakh persons," said Singh.

    The Prime Minister’s National Relief Fund (PMNRF) is established entirely with public contributions and does not get any budgetary support and accepts voluntary contributions from individuals, organizations, trusts, companies and institutions. It is primarily utilised to render immediate relief to the families of those killed in natural calamities and support expenses for medical treatment.

    Last week, senior Congress leader Anand Sharma had accused Sitharaman of being “insensitive" toward the general public while referring to the plight of PMC Bank customers. “When the government wants to snatch away the contingency buffer from the Reserve Bank of India (RBI), they have no issues; but when common man needs his/her money, the government says it cannot issue directions to RBI," said Sharma, a senior party spokesperson, while referring to Sitharaman’s meeting with PMC Bank’s affected customers in Mumbai.

    On 10 October, Sitharaman said the government will set up a committee comprising two secretaries and an RBI deputy governor to amend the cooperative bank regulatory framework.

    Meanwhile, Fadnavis, who is seeking a second term, said on 15 October that he will seek the Union government’s help on the PMC crisis. News agency PTI quoted Fadnavis as saying that he has assured depositors he will go to Delhi once the model code of conduct (in force for the 21 October assembly polls) is relaxed to seek the Centre’s intervention.

    The Shiv Sena, which is part of the ruling coalition in Maharashtra, on Tuesday urged RBI to merge PMC Bank with a larger public sector or private lender, PTI reported. In a memorandum to RBI, Sena leaders including Union minister Arvind Sawant and members of Parliament Gajanan Kirtikar, Rahul Shewale and Anil Desai said the central bank should consider merging PMC Bank with another bank such as Punjab National Bank, Bank of Baroda or ICICI Bank.

    The PMC Bank fiasco has its roots in loan exposures to real estate developer Housing Development and Infrastructure Ltd (HDIL) which turned bad but went unreported to the central bank. HDIL is promoted by the father-son duo of Rakesh and Sarang Wadhawan.

    Depositors of the bank were caught off-guard on 24 September when the central bank put restrictions on the cooperative bank and barred depositors from withdrawing more than 1,000 for six months. This was gradually relaxed to 40,000. At least three account holders have so far died in Mumbai, after these restrictions took effect, new agencies have reported. While two of the deceased PMC account holders were said to be distressed following the crisis and died of heart attack, the third person committed suicide.

    shayan.g@livemint.com

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    ABOUT THE AUTHOR
    Shayan Ghosh
    Shayan Ghosh is a national editor at Mint reporting on traditional banks and shadow banks. He has over 12 years of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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    Published: 18 Oct 2019, 12:09 AM IST
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