Fraud-hit PMC Bank gets new administrator

NEW DELHI: The Reserve Bank of India on Tuesday appointed former Union Bank of India executive A K Dixit as the new administrator of PMC Bank, replacing J.B. Bhoria, who stepped down on September 22 due to health reasons.

A year after the RBI superseded the board of crisis-hit Punjab and Maharashtra Co-operative (PMC) Bank, the RBI-appointed administrator is yet to succeed in finding a resolution plan for the bank. Citing reasons behind sluggish turnaround, the regulator said massive losses and steep erosion in deposits pose challenges to revival.

“While the administrator of PMC bank and the RBI have been exploring various options for resolution of the bank, several factors such as huge losses incurred by the bank resulting in its entire net worth getting wiped out, steep erosion in deposits, etc. continue to pose serious challenges in finding a workable plan for revival of the bank,” the RBI said.

The cooperative bank has also been making efforts for recovery of bad loans but has been constrained by the Covid-19 pandemic and legal complexities, RBI said. “Nevertheless, in the interest of the depositors, 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,” it said.

On 24 September last year, RBI put severe curbs on PMC Bank, including on cash withdrawals, amid a probe into accounting lapses.The directive is valid till December 22 this year as of now.  Of its total loan book of Rs 8,383 crore as on March 31, 2019, about 70 per cent had been taken by real estate firm HDIL. While the efforts to recover money from HDIL are still halfway, the administrator has approached major banks with a merger request.

Rescue operation
While enhancing the withdrawal limit to Rs 1 lakh in June, the RBI had said “more than 84 per cent of the depositors of PMC will be able to withdraw their entire balance”.