Do Not Say Extreme Things: Finance Minister's Response To "Consume Poison" Tweet On Bank Crisis

Do Not Say Extreme Things: Finance Minister's Response To "Consume Poison" Tweet On Bank Crisis(file image)

New Delhi: Finance Minister Nirmala Sitharaman on Monday appealed a Twitter user to calm down. The user said "people are bound to consume poison" as the aftershocks of the severe funds crunch at Punjab and Maharashtra Cooperative (PMC) Bank hit them.

On September 23, restrictions were imposed on PMC Bank by the Reserve Bank of India (RBI) citing "major financial irregularities, failure of internal control and systems", among other red flags. The fixed withdraw limit per customer was initially set at Rs 1000 but later, the limit was increased to Rs 10,000.

Ms. Sitharaman, to send this message clearly, on Monday tweeted, "On the Punjab and Maharashtra Cooperative Bank matter, a press release through the @PIB_India Depositors can access the website pmcbank.com for any grievance redressal and call on toll-free number 1800223993 for enquiries."

On the Punjab and Maharashtra Cooperative Bank matter, a press release through the ⁦@PIB_India⁩. Depositors can access the website https://t.co/PERlOr7HUO for any grievance redressal and call on toll free number 1800223993 for enquiries. https://t.co/sTL8TiGUUX

— Nirmala Sitharaman (@nsitharaman) September 30, 2019

Rakesh Bhat, a Twitter user, replied to the Finance Minister on the same thread. "Dear Madam, nothing new in this. We expect a quick resolution. There are ample ways to handle the crisis and this is least expected from GOI and RBI. Please accept this as the challenge and help otherwise people are bound to consume poison and die..." tweeted Mr. Bhatt. Mr. Bhatt Twitter bio says he is a "social activist", among other roles.

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Out of concern, Finance Minister replied to Mr. Bhatt: "I appeal to you not to mention/speak/write of such extreme things. Multi state cooperative institutions do not come under Ministry of Finance, even if they are called banks. @RBI is their regulator and they are taking action."

I appeal to you not to mention/speak/write of such extreme things. Multi state cooperative institutions do not come under Ministry of Finance, even if they are called banks. @RBI is their regulator and they are taking action.

— Nirmala Sitharaman (@nsitharaman) September 30, 2019

Angry account-holders of PMC have demanded immediate government intervention to ensure their deposits are safe.

PMC crisis came to light after it reported big losses owing to loans that have gone bad debts. A FIL was filed by Mumbai Police against the promoters of Housing Development and Infrastructure Ltd (HDIL) - Sarang Wadhawan and Rakesh Kumar Wadhawan - and PMC's former managing director Joseph Thomas. The case was filed for allegedly conspiring to cheat the bank of up to Rs. 4,300 crore, news agency PTI reported on Monday.  

There was no mention of the loan default by HDIL in PMC annual report. Not just that, the company continued to give loans despite the PMC being taken for insolvency. PMC's exposure to HDIL is nearly 73 percent of its total loan book size of Rs. 8,880 crore as of September 19, PTI reported quoting an unnamed source.

The police in a statement said that the bank officials did not classify the loans as non-performing advances despite HDIL not repaying. The officials also hid the information from the RBI.

Depositors at co-operative banks are in a relatively higher risk zone as the supervision and administration of these entities fall under state governments and the central bank. RBI doesn't have the power to take action against the banks unilaterally. All RBI can do is suggest a plan to the state government which has the ultimate authority to decide if the bank should continue operations or be shut down.

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