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Banking Regulation Bill: A ray of hope for PMC Bank depositors.

Published: September 17, 2020

The introduction of the ‘Banking Regulation (Amendment) Bill 2020’ in the Lok Sabha on Monday has raised hopes among the anguished depositors of the scam-hit Punjab & Maharashtra Co-operative (PMC) Bank that an end to their woes may be in sight.
The earlier ‘Banking Regulation (Amendment) Bill 2020’ (No56 of 2020), introduced in March 2020, has been withdrawn and a new Bill (No 114 of 2020) has been introduced.

In June 2020, President Ram Nath Kovind had promulgated the Banking Regulation (Amendment) Ordinance 2020, to ensure better management and sound regulation of cooperative banks; and facilitate making of reconstruction/ amalgamation scheme in the interest of depositors.

Ever since the bank was put under directions with effect from the close of business on September 23, 2019, deposit withdrawal has capped at ₹1 lakh per depositor.

Due to the cap on withdrawal, depositors, especially senior citizens, are suffering immense hardship as they used to depend on interest income to meet monthly expenses. So far, almost 60 PMC Bank depositors have lost their lives.

Depositors even took to the streets across the city, amid the ragingpandemic, to draw the attention of stakeholders, including the Reserve Bank of India, to their plight.

Chander Purswani, President, PMC Depositors Forum, said: “Our relentless campaign for the last one year to get our money back seems to be yielding desired results. We hope a quick resolution is found to the PMC Bank issue.”

The Reserve Bank, on June 19, said it has been engaging with the stakeholders to explore the possibility of a resolution of the bank. However, the process has been affected due to the lockdown on account of Covid and the continuing uncertainty around the pandemic, it added.

“Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges/limitations in resolution of the bank.

“Nevertheless, consultation with various stake-holders and authorities for resolution of the bank is continuing. It is, therefore, considered necessary to extend the aforesaid directions for a further period of six months (up to December 22) to take the process forward,” the central bank said.

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