What is the objection?
Stakeholders have urged the RBI to reconsider its plan and ensure prompt reimbursement to retail and institutional depositors who have been waiting for their money for more than two years.
The regulator had imposed deposit withdrawal restrictions on PMC Bank in September 2019. After several extensions, the RBI in December extended the validity of the restrictions until March 31.
Sahakar Bharati, an apex body for cooperative banks in India, had argued that proposals to stagger the payment of deposits interest-free for a certain period of time go against the interests of depositors.
Separately, Sahakar Bharati also met with Union Finance Minister Nirmala Sitharaman to seek her intervention in the matter, said the former of the two people quoted above.
The PMC Bank Account Holder Forum, a group of individual and institutional depositors, wrote to Sitharaman and Amit Shah, Minister of Interior and Cooperation, on January 1, seeking their intervention. BloombergQuint reviewed a copy of the letter.
In the letter, the forum claimed that the stress at PMC Bank was not a usual bank failure but a case of fraud. The depositors called for a fair resolution of the crisis through recapitalization, injection of funds, reconstruction, restructuring, merger of the bank while protecting the interests of stakeholders.
“We have been writing to the RBI since March 2021 and have written at least 10 letters requesting an in-person hearing as well as participation in the resolution process,” said forum coordinator Dipika Sahani.
If the final resolution plan does not properly modify the repayment plan, depositors and other stakeholders will be forced to seek legal action, Sahani said. “We will await the publication of the final plan before moving on to the next steps.”
The RBI considered the views expressed by these stakeholders, before submitting the resolution plan to the government, the second person quoted above said. As such, government approval of the plan is essential before it is implemented. So far, the government has expressed no opinion, the second person said.