PMC Bank Customers, Alert! You won’t get Rs 5 lakh deposit cover in first lot, here’s why

PMC Bank customers won’t get the Rs 5 lakh insurance cover in the first lot.

New Delhi: Punjab & Maharashtra Co-operative Bank (PMC Bank) customers won’t receive the Rs 5 lakh insurance cover in the first lot as the stressed state-owned lender is currently under the resolution process.

In the first lot, customers of 20 stressed banks will receive the secured amount from the Deposit Insurance and Credit Guarantee Corporation (DICGC).  The mandatory 90 days period for the first lot concludes on November 30. 

However, PMC customers will have to wait a little more to receive the compensation. Notably, in June, the RBI had given in-principle approval to a consortium of Centrum Financial Services and BharatPe to acquire the stressed PMC Bank.

According to Section 18, A (7) (a) of the Act, the period for the disbursement of Rs 5 lakh can be further extended by 90 days if a stressed bank is under the resolution process. 

This is the major reason why PMC customers will have to wait a little more to receive the compensation. The DICGC has recently pointed out that there could be a need to bring changes to the Section 18 A (7) (a) of the Deposit Insurance and Credit Guarantee Corporation (Amendment) Act, 2021,

Early in October, the RBI cleared the takeover decks and gave licence for small finance bank to the consortium to run the stressed lender. Also Read: Diwali 2021: Planning to send a gift to your loved ones? Check out THESE tech products

"The Reserve Bank finds it expedient in the interest of finalising a scheme of amalgamation of the insured bank with other banking institution or a scheme of compromise or arrangement or of reconstruction in respect of such insured bank, and communicates to the Corporation accordingly, the date on which the Corporation shall become liable to pay every depositor of such insured bank may further be extended by a period not exceeding ninety days," it said. Also Read: PFRDA allows investors to invest in Atal Pension Yojana via Aadhaar eKYC

With PTI inputs.