PMC Bank crisis: Cong holds RBI responsible for 'systemic failure'

The Congress on Friday blamed the RBI for the "systemic failure" that led to the Punjab and Maharashtra Cooperative Bank crisis and demanded answers from Finance Minister Nirmala Sitharaman, while also sought registration of an FIR against the bank's directors.

Congress spokesperson Gourav Vallabh alleged the PMC bank granted loans to defaulters flouting norms and accused the RBI of failing in its responsibility as a regulator, even as he expressed hope that the central bank would take immediate steps to ensure the crisis does not have a cascading effect on the entire banking sector.

He also demanded the immediate removal of withdrawal limits for bank customers and asked the RBI to allow housing societies to use their funds parked PMC bank.

Vallabh said the swift manner in which the RBI decided to restrict withdrawals initially to Rs 1,000 per depositor over a period of 6 months and then increased it to Rs 10,000 suggests that the central bank is "clueless" as to what the real issue is.

"The Congress party demands that the withdrawal limit must be removed. FIR must be registered against Bank Directors before they leave for safe foreign locations, so that accountability is fixed," he told a press conference.

"The recent RBI action on the Punjab and Maharashtra Cooperative Bank seems to be a systemic failure rather than an Individual Bank failure," he said.

The Congress leader alleged that "shocking revelations" have come out that a large numbers of directors on the Board of the bank have close proximity to the BJP and named one Ranjit Singh, son of Tara Singh, a 4-time party MLA from Mulund.

"Why were companies like HDIL who were defaulting on 2500 Cr loan was being extended Rs 96 crore as personal loan. Will RBI take full accountability for the failure of the Bank as well as its likely cascading effect on the Banking system in the Country? Has RBI acted in haste? Or if RBI claims that it has done the same for the safety of the depositors hard earned money, can RBI ensure safety of the money?" he asked.

"Can RBI emphatically state that this crisis is not going to affect the entire financial system?"