Failure of Indian Co-operative Bank Stokes Fear of Ripple Effects

In New Delhi’s bustling Malviya Nagar market, the local Punjab & Maharashtra Co-operative Bank branch was known for its helpful staff — and for offering interest rates on deposits that were 0.75 percentage points higher than mainstream commercial banks, the Financial Times reported. “The staff here were very friendly,” says Tilak Arora, 43, the owner of a video game parlour whose life-savings of Rs10m ($141,000) was deposited at PMC. “They also did not demand too many documents to open the account. It was a very nice bank — up until now.” Like most PMC customers, Mr Arora has been in a panic since late last month, when the Reserve Bank of India abruptly took control of the co-operative lender and announced that withdrawals would be restricted to just Rs1,000 per account for the next six months. Read more