Buoyed up with the success of the reconstruction scheme for The Yes Bank , RBI governor Shaktikanta Das hoped that the issue of PMC Bank would also be solved similarly. Das hinted at intense negotiations with the stakeholders to resolve the issue.
“With regard to the Punjab & Maharashtra Co-operative Bank, the Reserve Bank is engaged with all stakeholders to find out a workable solution, as losses are very high, eroding deposits by more than 50 per cent”, said the Governor.
Talking about the Yes Bank, the Governor said “we forged a unique public-private partnership between leading financial entities of India, and it was implemented in a very quick time, which helped the bank’s revival, successfully safeguarded the interest of the bank’s depositors and ensured financial stability.
“In case of the Urban Co-operative Banks (UCBs), special efforts are being made to move towards a risk-based and pro-active supervisory approach to identify weaknesses in their operations early. An early warning system with a stress-testing framework has been formed for timely recognition of weak banks for appropriate action”, he underlined.
Formation of an ‘umbrella organization’, has been approved to provide liquidity, capital, IT and capacity building support to UCBs, the Governor stressed.
The exposure limits of the UCBs have been brought down to reduce credit concentration and the priority sector targets have been revised substantially upwards so that UCBs remain focused on their core segment – i.e., micro and small borrowers, he underlined.
The recent amendments in the Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949 will facilitate our supervision processes with respect to NBFCs and UCBs, respectively, he felt.
Shaktikanta Das was making a keynote speech organized by the State Bank of India. “I sincerely appreciate the efforts of the organising team in putting together this virtual conference which has now become a new normal. Banks and other financial entities are today at the forefront of the country’s counter measures against the economic impact of COVID-19”, he said congratulating the organizers.