Page 9 - Banking Finance October 2019

RBI CORNER

RBI task force suggests RBI levies restrictions on PMC
self-regulatory body to The Reserve Bank of India has recently imposed restrictions on Punjab and
Maharashtra Co-operative Bank (PMC Bank) in terms
oversee secondary mar- of operations, which resulted in chaos outside its

kets branches in the financial capital.
Headed by Canara Bank Chairman, a According to the RBI directions to PMC Bank, with-
task force set drawals have been capped at Rs 1,000 per account
up by the RBI and the bank is not allowed to make any fresh loans.
has recently The RBI monitors banks' health and issues such directions in case of concerns
submitted its over the financial health of an institution. However, no reasons were specified
report on a by the central bank for its restrictions on PMC Bank.
secondary mar- "The issue of the directions by the Reserve Bank should not, per se, be con-
ket develop- strued as cancellation of its banking licence. The bank will continue to under-
ment for corpo- take banking business with restrictions till further notice/instructions," the RBI
rate loans. said in a notification. The RBI said that the restrictions will be in force for six
T. N. Manoharan, chairman, Canara months. According to PMC Bank's website, the lender was awarded the sched-
Bank, has recommended setting up uled status in 2000 and has a presence in multiple states. The bank could not be
of a self-regulatory body (SRB), which reached for comments immediately.
will keep a watch over the proposed
secondary market. 45th Empowered Committee meeting on MSMEs by RBI

The self-regulatory body can be set Jammu division of RBI has recently hold 45th meeting of Empowered Commit-
up as an association by scheduled tee on MSMEs for the state of Jammu and Kashmir.
commercial banks, public financial in- Chaired by Thomas Mathew, Regional Director, RBI,
stitutions and other related entities, J&K, the meeting was attended by senior officers of
and may be incorporated as a Sec- major public and private sector banks in the State, be-
tion 8 company under the Companies sides Sunil Gupta, president of J&K SLBC and Anoo
Act, 2013. It must be set up within Malhotra, Director, Industries and Commerce, Jammu.
three months from the date of ac- The General Manager, RBI, Satya Narain provided an overview of the objec-
ceptance of the recommendations, tives of the meeting. The Regional Director, RBI, in his address, stressed on the
the report added. importance of the MSME sector to the Indian economy, especially their contri-

The above mentioned regulatory bution to GDP and employment generation. He urged the participants to step
body’s role will be to standardize up their awareness initiatives so that both prospective and established
loan documentation and covenants, entrepreneurs are aware about the policies and schemes targeting the MSME
periodically review the documenta- sector.
tion, ensure standardization of prac- The Committee reviewed the progress of banks in extending credit to the MSE
tices, and promote growth, liquidity, sector and issues being faced by them, status of CGTMSE covered cases, status
efficiency and transparency of the of NPAs in the MSE sector, progress on the structured mechanism for flow of
proposed secondary market. credit to the MSE sector, revival and rehabilitation of sick units, identification
It will also be responsible for setting of unrecognized clusters for MSE, implementation of financial education
up a central loan contract registry, programmes for the sector, etc. The banks assured the house that they are
which will finalize the detailed design committed to empowering the MSME sector by providing in-time and adequate
structure, infrastructure, technologi- financing and appraised the house regarding the initiatives taken by them in
this direction.
cal aspects and nature of incorpora-
tion, to ensure legal sanctity of its They also assured to promptly address the concerns raised by the State admin-
operations and for executing agree- istration. The participants assured to work closely with all stakeholders for nur-
ments with other agencies. turing and supporting the sector for the overall development of the State.

BANKING FINANCE | OCTOBER | 2019 | 9