Finance Minister Nirmala Sitharaman on Monday sought to calm down a Twitter user who said "people are bound to consume poison" as the aftershocks of the severe funds crunch at Punjab and Maharashtra Cooperative (PMC) Bank hit them.
The Reserve Bank of India (RBI) on September 23 imposed restrictions on PMC Bank citing "major financial irregularities, failure of internal control and systems", among other red flags. It initially fixed the withdrawal limit per customer at Rs. 1,000, which was later raised to Rs. 10,000.
To send this message clearly, Ms Sitharaman 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."
A Twitter user, Rakesh Bhat, 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, who on his profile page says he's a "social activist", among other roles.
The Finance Minister, apparently concerned by the tweet, replied to Mr Bhat: "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."
Angry account-holders of PMC have demanded immediate government intervention to ensure their deposits are safe.
The crisis at PMC surfaced after it reported big losses owing to loans that have gone sour. The Mumbai Police have filed a First Information Report against the promoters of Housing Development and Infrastructure Ltd (HDIL) - Sarang Wadhawan and Rakesh Kumar Wadhawan - and PMC's former managing director Joseph Thomas, for allegedly colluding to cheat the bank of up to Rs. 4,300 crore, news agency Press Trust of India reported on Monday.
PMC has not mentioned the loan default by HDIL in its annual report and continued to give loans despite the company being taken for insolvency. PMC's exposure to HDIL is nearly 73 per cent of its total loan book size of Rs. 8,880 crore as of September 19, PTI reported quoting an unnamed source.
Despite HDIL not repaying, the bank officials did not classify the loans as non-performing advances and intentionally hid the information from the RBI, the police said in a statement.
Depositors at co-operative banks are in a relatively higher risk zone as the supervision and administration of these entities falls under state governments and the central bank. The central bank cannot take any action against the banks unilaterally but can suggest a plan to the state government which has the ultimate authority to decide if the bank should continue operations or be shut down.