india

Updated: Sep 25, 2019 11:49 IST

Two Goa-based cooperative banks, which were in merger talks with the Punjab and Maharashtra Cooperative (PMC) Bank for their revival, are now looking at other options following the curbs imposed on PMC Bank by the Reserve Bank of India.

The central bank on Tuesday put regulatory curbs on the PMC Bank for six months with effect from September 23 following which chaotic scenes were witnessed at its various branches in Mumbai. The RBI monitors the financial health of banks and issues such directions in case there are concerns over the economic health of a bank.

The Mapusa Urban Cooperative Bank and the Madgaum Urban Cooperative Bank, both of which are in financial difficulties and facing RBI restrictions, were looking to the PMC Bank as a way out of their problems.

The Mapusa Urban Cooperative Bank, headquartered at Mapusa town in North Goa, is facing RBI curbs since July 2015 with depositors not allowed to withdraw more than Rs 1,000. After more than four years of trying to revive the bank, a special general body meeting of bank shareholders held on September 21 approved a merger with PMC Bank and authorised the board to proceed with merger talks.

“We cannot go with them anymore. But we are not worried because there are other banks in the pipeline,” Ramakant Khalap the founder chairman and director of the Mapusa Urban Cooperative Bank, said.

The Madgaum Urban Cooperative Bank’s problems are more recent with the RBI imposing curbs in May this year and restricting withdrawals at Rs 5,000.

The Madgaum bank, based in South Goa, too had sought a merger with the PMC Bank, but its final merger was yet to be approved by the board and shareholders.

“Our plan to merge with PMC is over. We are fortunate that we have been saved as the RBI restrictions on PMC came at a time when we had set in motion the process for the merger,” managing director Kishor Amonkar said.

Both banks are now looking towards another cooperative bank from Maharashtra -- the Thane Janata Sahakari Bank (TJSB).

Goa Chief Minister Pramod Sawant has blamed those at the helm of both banks for the crises they are facing.

“I’m saying that the board of directors and chairmen are responsible for the state of affairs of these two banks. They have devalued and drowned these banks. The manner in which they gave loans to undeserving people and unnecessary facilities for their staff, I have no hesitation in saying that they have misused funds and they are responsible and the government cannot be held responsible,” Sawant said.

“They keep giving the excuse that they are in trouble because of the mining shutdown, that is not true, it is these people who are responsible. Yet, the government will try various means. We were only talking with the PMC bank but after what happened, we cannot take it forward,” Sawant said adding that now other options will have to be explored.

Described as a multi-state cooperative banking entity, the PMC Bank has branches in Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. Founded in 1984 in a small room in Mumbai, it has now grown to a network of 137 branches in six states and ranks among the top 10 cooperative banks in the country.

According to the RBI regulations, PMC Bank’s savings account holders cannot withdraw more than Rs 1,000. The bank cannot grant or renew any loans and advances, make any investment, incur any liability including borrowing of funds and acceptance of fresh deposits or disburse any liabilities without the prior approval from the RBI, said the bank in a press release dated September 23.