Maharashtra State Co-operative (MSC) Bank has written to Union Finance Minister Nirmala Sitharaman requesting a merger of the branches of PMC Bank to takeover the troubled lender. The proposal seeks to merge the branches instead of the whole bank.
A few months ago, NCP leader and Maharashtra minister Jayant Patil had publicly suggested the idea of merging PMC Bank with MSC Bank.
Any progress on such a scheme can only take place once the exact extent of the fraud and the liabilities arising are ascertained through a forensic audit, MSC Bank Chairman Vidyadhar Anaskar clarified.
For branch merger, as opposed to the bank merger idea, he explained that MSC Bank is an apex bank for cooperatives and Punjab and Maharashtra Cooperative Bank's multi-state presence makes it difficult to execute such a deal.
"We have written to the Finance Minister suggesting a branch merger and not a bank merger," Anaskar told reporters here.
He said under the proposed scheme, apex banks in Gujarat and other states (where PMC has a presence) will take over PMC's branches to make it easier for the transaction to go through.
He also said that the RBI may not be averse to a branch merger that he is suggesting and such a transaction will not require any changes in laws.
In support of his argument, Anaskar reminisced that over six years ago, there was a similar proposal for a branch merger of the troubled Rupee Cooperative bank and the RBI was amenable to the idea.
It can be noted that over Rs 11,000 crore in depositor money has been stuck after the RBI decided to put PMC Bank under instructions in September last year, and appointed an administrator on it after discovering mismanagement. The bank has been found to have given over Rs 6,700 crore loans to a single company - realty player HDIL - through allegedly fraudulent means and also hid the stress from the Reserve Bank of India by creating separate books of accounts.
The police has pegged the extent of the fraud at PMC Bank at Rs 4,700 crore, while other agencies, including the Enforcement Directorate, are also investigating the matter.