September 16, 2020

Fraud-hit PMC approaches other banks for possible merger: Administrator

[ by Legal Era News Network ]


Fraud-hit Punjab and Maharashtra Co-operative Bank (PMC) has approached other banks over a possible merger after its efforts to recover funds from a big borrower have been disrupted by the coronavirus pandemic, the bank’s administrator said in a court filing at the Delhi High Court.

After detecting financial irregularities last year, the Reserve Bank of India (RBI) took control of the bank.

PMC has “tried to engage with the major banks of the country to request for a merger”, the bank’s administrator said in a Sept 10 filing at the Delhi High Court, without divulging anymore details. The bulk of PMC’s loan book was found to be disbursed to one Indian real estate company, HDIL, and an RBI-appointed administrator, Jai Bhagwan Bhoria, has been trying to recover the dues in a bid to rescue the lender. Authorities have been investigating officials of both PMC and HDIL.

According to the filing, HDIL and its associates owe Rs. 69.81 billion to PMC, but at Rs. 11.6 billion, the realisable value of its securities was “grossly insufficient”. Other legal processes to sell certain securities have also been hit as courts have not been fully operational during the novel coronavirus pandemic, the filing said.

Set up in 1984, PMC is a regional co-operative lender with 137 branches across six states in India, and its sudden downfall in late September 2019, has left thousands of its depositors struggling. Thousands of PMC depositors have been unable to access their deposits for a year as the RBI has capped withdrawals at Rs. 100,000.

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