MUMBAI: Even as the Reserve Bank managed a resolution plan for the troubled private commercial bank- Yes Bank, it has extended restrictions to the troubled cooperative bank- Punjab and Maharashtra Co-operative (PMC) Bank citing restriction over the regulatory turf of co-operative banks and legal restrictions delaying the process.
Defending its position, the banking regulator elaborated its stand regarding revival of the co-operative bank. “It must be noted that unlike in the case of commercial banks, the Reserve Bank has no powers to draw up an enforceable scheme of reconstruction of a cooperative bank” the Reserve Bank said in a release on Saturday. “
Nevertheless, in the interest of the depositors and the stability of the cooperative banking sector, the Reserve Bank of India, in consultation with various stakeholders and authorities, is trying to work out a scheme for revival of the bank”
But it reiterated the need to extend restrictions by another three months ” In order to take this forward, it is considered necessary to extend the aforesaid Directions for a further period of three months” RBI said.
The multi-state urban cooperative bank was placed under the RBI’s directions on September 23, 2019 which including restriction on deposit withdrawal and lending, following under-reporting of its exposures, financial irregularities, failure of internal control and systems of the bank .
The RBI also superseded the bank’s board and put it under an administrator.
Significantly, the move comes within days of the regulator announcing a restructuring plan for the troubled Yes Bank which is put back on its feet within a few days of a moratarium announced on its operations earlier in the month.
Reserve Bank, said that it has been closely monitoring the situation and has been holding regular meetings with the Administrator and the Advisory Committee of the bank.
The Reserve Bank has also been, directly and through the Administrator, discussing with various authorities on expeditious sale of securities and recoveries of loans. Due to various factors including legal processes, tangible outcomes are taking some time.