Mumbai: Reserve Bank of India governor Shaktikanta Das on Friday said the central bank is looking into all aspects of the Punjab and Maharashtra Co-operative Bank Ltd (PMC Bank) crisis. He said RBI acted swiftly as soon as it was made aware of the crisis at PMC Bank. “We will not allow a cooperative bank to collapse," Das said at a press conference after RBI’s monetary policy committee announced a 25 basis points repo rate cut.
Last month, RBI put restrictions on withdrawing money from all accounts of the bank, sparking panic among depositors. It also suspended the management and appointed a new administrator.
“Every such incident is an experience. Based on this experience we will give a fresh look at the regulatory framework in existence," said Das. “One incident shouldn’t be used to generalize about the health of the cooperative banking system," he added.
With the crisis at PMC Bank threatening to snowball, Das reassured that the “Indian banking system remains sound and stable, and there is no need for any unnecessary panic".
On Thursday, RBI relaxed the deposit withdrawal limit for PMC account holders to ₹25,000 for the next six months from ₹10,000 earlier.
The Reserve Bank of India has been reviewing the liquidity position of the bank and tweaking the withdrawal limits accordingly. The regulator also said that it has decided to appoint a three-member committee to assist the administrator.
Separately, two directors of the troubled real estate company Housing Development and Infrastructure Ltd (HDIL), which set off the crisis at PMC Bank, were arrested by the Economic Offences Wing of the Mumbai Police on Thursday.
PMC Bank’s trouble started after HDIL and its directors defaulted on their exposure of ₹6,500 crore to the bank, putting it under liquidity stress. The bank’s suspended managing director and chief executive officer, Joy Thomas, confessed that the bank had created fake accounts to hide its mounting exposure to HDIL. He also admitted to misleading RBI for six to seven years by concealing the information and under-reporting its bad loan exposure towards the troubled real estate company.