The RBI Governor Mr Shaktikanta Das today said that the RBI would take prompt corrective action wherever appropriate. He reiterated that the banking system is sound, stable and said that it was wrong to judge and generalise the situation in the entire co-operative banking sector based on one incident at a co-operative bank. He said that the RBI would not allow any co-operative bank to fail. He appealed to customers not to believe in market rumours and avoid panic.
Mr Das said that as soon as PMC Bank issue came to the RBI’s notice, action was taken swiftly and promptly. Around 73% of PMC Bank’s loan exposure is said to be to HDIL, a bankrupt developer. The Economic Offences Wing (EOW) of the Mumbai police arrested two promoters of HDIL Rakesh Wadhawan and Sarang Wadhawan in connection with irregularities in the PMC bank. He admitted that there are ongoing discussions with the government on regulatory provisions for cooperative banks and that in view of the PMC imbroglio the RBI will give a fresh look at existing regulatory experience.
Mr Das refused to comment on the Indiabulls Housing Finance- Lakshmi Vilas Bank merger proposal saying that he won’t comment on individual cases. He claimed to be unaware of any government demand from RBI for an interim dividend. PTI had earlier reported that the government might seek an interim dividend of about Rs 30,000 crore from the RBI towards the end of the financial year to meet its fiscal deficit target of 3.3 per cent of GDP for 2019-20.