According to Finance Minister Nirmala Sitharaman, nearly 78 per cent of PMC Bank’s depositors are not allowed to withdraw the entire amount available in the bank account, media reported. Sitharaman give remarks in the backdrop of a crisis at cooperative bank PMC in September, after which the Reserve Bank of India (RBI) restricted withdrawals from its accounts amid alleged financial irregularities in a move that impacted thousands of depositors. The PMC case has sparked renewed concerns about the health of the country’s troubled banking sector, which has been rocked by a multi-billion dollar fraud at a state-run lender, the collapse of a major infrastructure lender, bad loan issues at state-run banks and a liquidity squeeze that has hit shadow lenders.
A number of fraud cases have come to light at both state-run and private banks in the country over the past two years, where the banking industry has already been grappling with nearly $150 billion in bad loans.
In October, police alleged that Punjab and Maharashtra Co-operative Bank (PMC) had used more than 21,000 fictitious accounts to hide loans it made to a single real estate firm. The Economic Offences Wing (EOW) of Mumbai Police has made a number of arrests in connection with the alleged Rs 4,355-crore PMC Bank scam, including that of its former chairman Waryam Singh and former managing director Joy Thomas.
