Urban co-op banking experts are bewildered at the news of the RBI restriction on Maharashtra based Multi State Scheduled Punjab and Maharashtra Cooperative Bank as the UCB has been maintaining a noteworthy track record.
Most of all, they fail to understand the reasons behind this Direction as RBI has not stipulated anything concrete except the vague words like “irregularities observed” in the operations of the UCB. They also talk of under-reporting of bad loans. But to whom, they fail to explain.
The Bank had NPA of only 0.5 per cent till last year which became 2.3 percent this year. “But even this is much less than that of the govt controlled PSU banks”, they say.
Is it a case of one particular transaction indulged in by one of the directors or some top-ranking official of the bank that the RBI has noticed and hence this action, ask many experts? It may be possible that the UCB tried to hide the bad loans given to favour a few, experts opine.
If it is so then it is indeed unfair on the part of the Regulator to punish the entire bank and 51 thousand depositors for the mistake of one or a few individuals, they argue. The black sheep should be identified and punished without suspending the operation of the Punjab and Maharashtra Cooperative Bank, they argue.
Verifying the accounts and financial track record of the bank till date, they argue that the UCB has been maintaining a very transparent and healthy banking record, this sudden imposition of Direction is incomprehensible. They expect RBI to explain.
It bears recall that as on 31st March 2019, the Punjab and Maharashtra Cooperative Bank had a business mix of Rs 20,000 crore, Deposit base is Rs 11,617.34 crore and loans and advances of Rs 8,383.33 crore.
The bank’s network of 137 branches is spread across Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh.
The bank earned a net profit to the tune of Rs 99.69 crore, according to the PMC Bank Annual Report.
It was because of this reason that the urban cooperative banking fraternity was jolted as soon as this news came in. They searched for clue but failed to get any either from the financial data of PMC or that from the notification of RBI imposing Directions on the Bank.
More than half a lakh of depositors have nowhere to go even as RBI is silent after imposing the Directions. Meanwhile, the mainstream media that hardly focus on the rising NPAs of PSU banks have a field day condemning PMC in particular and co-op sector in general.
There are also some who attribute these restrictions to political motives and say with the Maharashtra assembly elections round the corner such moves should not surprise us. There are rumours of some ghost depositors withdrawing money in view of the elections.
Meanwhile, the MD of the bank has taken the responsibility and assured the depositors that the irregularities will be rectified before the expiry of six months.
According to news reports , RBI announced on 24 September , 2019 restrictions on the Punjab & Maharashtra Cooperative ( PMC ) Bank from carrying out a majority of its routine transactions for a period of six months. Obviously , the RBI move while being well intentioned , has put customers in a very tight position, disabling them from carrying on their life as usual for no fault on their part as they may not be able to withdraw more than rupees one thousand during the restriction period. In this context , it may be apt to refer readers to this Vedic astrology writer’s predictive alert through article – “ World trends in April to August 2019” – brought to public domain widely in March and subsequently on 5 April 2019. The predictive alert had said that during a period of four and a half months from mid-April to August 2019 , among other countries specified in the article , more care and appropriate strategy may be called for in India also in relation to the following :-
“ 1. Economic and financial aspects may reflect major worrisome concerns.”
A review of the predictive alerts carried out by this writer in May 2019 had suggested that such need for more care and appropriate strategy may reach out to mid-October , while the period from about 7 August to 9 October could be particular. And within that period , 25 September to 9 October in 2019 looked to be more particular. It seems that announcement of RBI on 24 September 2019 can be counted as meaningfulness of the predictive alert.