One of indias biggest banks has been rescued by the government
You're likely referring to the recent developments surrounding Punjab and Maharashtra Cooperative (PMC) Bank, one of India's largest cooperative banks.
On September 24, 2020, the Reserve Bank of India (RBI) imposed a moratorium on PMC Bank, restricting withdrawals to a maximum of ₹1,000 per depositor. This was done to prevent a potential bank run and to protect depositors' interests.
The moratorium was imposed after it was discovered that the bank had been involved in a massive fraud, with a significant portion of its assets being fake or non-existent. The bank's management had allegedly created fake loan accounts and manipulated its books to hide its financial troubles.
In response to the crisis, the Indian government has taken several steps to rescue the bank. Here are some of the key measures:
- Capital infusion: The government has infused ₹10,000 crore (approximately $1.4 billion) into PMC Bank to strengthen its capital base and restore its financial health.
- Reconstituted board: The RBI has reconstituted the bank's board of directors, replacing the existing management with a new team to oversee the bank's revival.
- Restructuring: The bank's assets and liabilities are being restructured to ensure that it can recover from the financial crisis.
- Deposit insurance: The Deposit Insurance and Credit Guarantee Corporation (DICGC) has guaranteed deposits up to ₹5 lakh (approximately $7,000) to protect depositors' interests.
- Merger with another bank: There are reports that PMC Bank may be merged with another bank to create a stronger and more stable institution.
The government's efforts aim to restore confidence in the banking system and protect the interests of depositors, employees, and other stakeholders. The rescue package is expected to help PMC Bank recover from its financial troubles and return to stability.