PMC Bank trying to use the escape hatch used by tiny cooperative banks

But with a deposit base of more than Rs 11,600 crore, PMC is not a small cooperative bank and has therefore attracted public attention

Punjab and Maharashtra Co-operative Bank’s (PMC) proposal to convert deposits into equity is not a novel idea, but certainly the most visible one.  

Although not reported anywhere, every year depositors of one or two tiny cooperative banks undergo this fate. In most cases, deposits are converted into subordinated debts, to be serviced over at least 10 years, or the banks are merged with other cooperative banks and deposits beyond a certain amount are converted into equity with a deep discount. Both the options are done after getting consent from the depositors. The harassed depositors prefer the debt route as liquidating the