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'India's fraud-hit PMC asked other major banks for merger'

Indias fraud-hit PMC asked other major banks for merger
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NEW DELHI: India's fraud-hit PMC Bank has approached other banks over a possible merger even as its efforts to recover funds from a big borrower have been disrupted by the Coronavirus pandemic, the bank's administrator said in a court filing seen by Reuters.

Authorities started investigating Punjab and Maharashtra Co-operative Bank (PMC) for fraud last year and the Reserve Bank of India (RBI) took control of it after detecting financial irregularities.

Thousands of PMC depositors have been unable to access their deposits for a year as the RBI has capped withdrawals at 100,000 rupees ($1,359).

Punjab and Maharashtra Co-operative Bank has "tried to engage with the major banks of the country to request for a merger", the bank's administrator said in a September 10 filing at the Delhi High Court, without identifying the banks or giving other details.

The bulk of PMC's loan book was found to be disbursed to one Indian real estate company, HDIL, and an RBI-appointed administrator, Jai Bhagwan Bhoria, has been trying to recover the dues in a bid to rescue the lender. Authorities have been investigating officials of both PMC and HDIL.

HDIL and its associates owe 69.81 billion rupees ($949 million) to PMC, but at 11.6 billion rupees

($157.56 million), the realisable value of its securities was "grossly insufficient", Bhoria said in the filing of the case brought forward by two aggrieved PMC depositors.

Other legal processes to sell certain securities have also been hit as courts have not been fully operational during the novel Coronavirus pandemic, the filing said.

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