Depositors of PMC Bk, 20 coops to get up to ₹5L

Customers of 21 failed cooperative banks, including the infamous Punjab & Maharashtra Cooperative  Bank, will get back up to Rs 5 lakh of their deposits. The Deposit Insurance and Credit Guarantee Corporation of India has said that, following the amendment of the DICGC Act, it will make payments to depositors within 90 days.

Besides PMC, the large banks include Rupee Coop Bank, Kapol Cooperative Bank, Maratha Coop Bank, and City Coop Bank — all from Maharashtra. Depositors in these banks have been waiting for years for their money. Traditionally the RBI placed troubled banks under an ‘all-inclusive direction’, meaning they could not deal with any of their assets or liabilities without the central bank’s permission. This was done after the bank turned unviable. In the normal course, depositors would have been paid if all options failed and the bank was liquidated.

The payout will pave the way for the resolution plan of PMC Bank submitted by Centrum and Bharat Pe. With bulk of the retail deposits out of the way, the new promoters can get a better idea of the balance liabilities on larger deposits and submit their plan. With bulk of the liabilities out of the way, rival cooperatives might find it easier to merge some of the failed banks.

The DICGC (Amendment) Act — which was notified on August 27 and came into force on September 1 — allowed the deposit insurance money to be paid upfront. Depositors have to submit their willingness to claim insurance.

The banks have to submit a claim list by October 15 and update the position as of November 29 with principal and interest in a final updated list. Only those depositors who have expressed their willingness to claim insurance will get their money.

Depositors in Maharashtra will be the biggest beneficiaries with 11 of the failed banks based here. The eight other banks are Hindu Coop Bank, Needs of Life Coop Bank, Padmashree Vithal Rao Vikhe Patil Coop Bank, Shri Anand Coop Bank, Mantha Urban Coop Bank, Sarjeraodada Naik Shirala Coop Bank and Independence Coop Bank.

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