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A year after the Reserve Bank of India (RBI) imposed restrictions on Punjab and Maharashtra Cooperative (PMC) Bank, depositors are still awaiting a resolution—although two scheduled commercial banks have been brought back from the brink in the meantime.

In fact, RBI on Friday extended the restrictions on PMC Bank till 31 March 2021, subject to a review.

In 2020 two private sector lenders, Yes Bank and Lakshmi Vilas Bank (LVB), were revived. In Yes Bank’s case, the central bank and the government brought in other lenders to invest and rescue the bank. For LVB, the matter was addressed within two weeks and the Indian arm of Singapore’s DBS Bank was roped in for a merger.

Responding to a Right to Information query filed by Mint, RBI said it has taken four broad steps to find a resolution to the PMC Bank crisis. It has appointed an administrator and an advisory committee; raised withdrawal limits in “hardship cases" for treatment of critical ailments, and delegated powers to the bank for speedier disposal of such requests. Besides, PMC Bank took action to recast its balance sheet, made recovery efforts of bad loans through seizure and sale of property part from reducing its operational expenses, the RBI said.

“Further, it may be noted that PMC bank has recently called for Expression of Interest (EoI) vide advertisement dated 3 November 2020 seeking investment in the bank so as to achieve positive net worth and resume regular banking operations," RBI said, adding that responses to the EoI are awaited.

“PMC bank and RBI are continuing to engage with the stakeholders to explore the possibility of finding a viable and workable solution for the resolution of the bank."

On Friday, the central bank said PMC has received four proposals in response to EoIs invited from investors.

The stark contrast in the handling of these resolution cases has revived the discussion over how the central bank took different approaches in resolution of two types of lenders—commercial and cooperative banks.

To be sure, RBI’s hands were tied to an extent in the case of cooperative banks. Before the government vested more powers to RBI in June, cooperative banks had “duality of control" by the central bank and the state or central government.

PMC Bank had total advances of 4,472.78 crore and deposits of 10,727.11 crore as of 31 March. Its gross non-performing assets were at 3,519 crore in FY20, up from 315 crore in FY19, showed documents on its website. Asked about the challenges in resolving PMC Bank, RBI governor Shaktikanta Das told reporters on 4 December that the case of the cooperative bank is different. “As you would be aware, the bank has called for EoIs for possible investors who would like to invest and take over the bank. The last date for receipt of EoI and the information memorandum was 30 November and the response looks positive at this point in time," said Das.

On 24 September 2019, RBI put severe curbs on PMC Bank, including on cash withdrawals, amid a probe into accounting lapses. Cash withdrawals were first capped at 1,000 per account, but relaxed gradually to 100,000 this June, allowing over “84% of depositors to withdraw their entire account balance".

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