Saturday, January 23, 2021
Home Opinions As PMC bank depositors wait a long fight to get their money bank, the...

As PMC bank depositors wait a long fight to get their money bank, the scam raises several questions on bank regulation

According to media reports, the loans to HDIL were not reflecting in the books of accounts at all. It was diverted to the group through thousands of dummy accounts that were created for this purpose

As the depositors of Punjab and Maharashtra Cooperative Bank (PMC) wonder whether their deposits in the bank are safe, several questions have emerged on how the crisis was brewing in the bank without being detected. And as more and more information about the malpractices happening at the bank emerge, they pose questions instead of answering any.

A recent news report from PTI show that PMC Bank has an exposure of ₹6500 crore, and not ₹2500 crore as previously reported, towards one single entity, the Housing Development and Infrastructure Limited (HDIL) including its group companies. It is 4 times more than what is allowed as per regulations. RBI rules allow banks to lend maximum of 15% of its their total loan portfolio to a single entity, while the limit is extended upto 20% for group companies. Somehow, the bank had kept this information hidden from everyone. According to media reports, a whistle-blower board member leaked the information to RBI which prompted the now ex PMC Bank MD Thomas to approach the RBI and report the lapse.

HDIL, a slum redevelopment focused company, is in the bankruptcy court after being hit by a severe cash crunch following the failure of some of its key projects.

While RBI has maintained a tight position on the bank, at this point it is yet to confirm the exact irregularities it has detected in the bank. The regulator has suspended the board of the bank and has appointed an administrator.  But it has not come forward and admitted that PMC Bank indeed has this exposure to a single entity. If RBI does so, it is going to send the account holders into a tizzy.

PMC bank assures customers

The latest audit report of the bank states that “During the course of our audit, we have not come across material and significant transactions which appear to be contrary to the guidelines issued by the Reserve Bank of India and National Agriculture and Rural Development Bank”.

If the reports that the bank has 73% exposure to one single entity is true, I cannot wrap my head around what exactly do the auditors look for when they audit the bank. How is it even possible to miss this kind of mismanagement is beyond me. Isn’t this as simple as seeing how much loan is given to each entity and adding it up?

According to media reports, the loans to HDIL were not reflecting in the books of accounts at all. It was diverted to the group through thousands of dummy accounts that were created for this purpose. Moreover, reports say that some loans were not reflecting in the accounts of the bank as those were not computerised to hide the faulty credit lines. It is a big question how a bank can conduct such a massive scam to benefit a single entity without getting detected. How the auditors didn’t detect that the bank was lending money to non-existent entities needs to be probed thoroughly.

Most media reports so far are concentrating on how much money can be withdrawn from each account, the RBI has now allowed the depositors to withdraw ₹10,000 from their accounts in the bank, up from original limit of ₹1,000. But this is of little consequence as 80% (9300 cr) of the deposits in PMC Bank are in Fixed Deposits (FD) as per their annual report for 2018-19. Therefore, it is not going to help those people who have FDs which usually runs to lakhs of Rupees.

One interesting tidbit here is that two of RBI’s employee co-op societies also have FDs in PMC Bank. Reserve Bank Officers’ Co-operative Credit Society Ltd has a deposit of ₹105 crore, while Reserve Bank Staff & Officers Co-operative Credit Society Ltd has a FD of ₹86.50 crore with the bank. It would be very interesting to know if that money is still there in PMC Bank or the RBI co-op societies were able to take out their FDs before restrictions were imposed.

PMC Bank account holders have formed groups on WhatsApp, Facebook and Telegram to coordinate the protests and to make our voices heard. We are running hashtag campaigns (#PMCBankCrisis #PMCBank) on Twitter and Facebook for the last couple of days. Getting people on board to join these groups hasn’t been easy for us. Unfortunately, many account holders feel embarrassed to admit that they have lost money among their peer groups. They are on some kind of guilt trip that it was their mistake that they are in this situation. So, they are not coming forward to participate in social media campaign or on the streets as much as we would have liked to. Currently, we have about 850 people in a single group on Telegram with account holders from Mumbai, Pune, Bangalore and Delhi. We have not been able to leverage WhatsApp because of the limit on number of members in a single group on WhatsApp platform. So, it has been a challenge to get people to install Telegram and join the group as well.

PMC bank protest

Given that it is election season in Maharashtra where most of the account holders reside, none of the “leaders” of any political party has made any comment on this issue except for Kirit Somaiya, VP of BJP Maharashtra. And unfortunately, he is saying all the wrong things from FD holders POV to score political brownie points. Raising how much money can be withdrawn is not going to help as 80% of the money is in FDs and nothing can be taken out of them.

The administrator appointed by RBI said that it will take about 2 weeks to check and file a report on what is happening. We fear that we are going to run out of steam by then as most of us have to get back to our jobs. Along with the current small set of people we have been able to gather, we are banking on media support for the next few days to keep up the pressure on RBI and the government by asking the right questions and hoping to fix responsibility.

I understand that this is going to be a long fight for all account holders to get back the money, even partially.

 

Author: Karthik Ramachandra

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

 

Related Articles

Trending now

Haryana Police confirms that the ‘masked man’ was forced by farmer union leaders to make false allegations against police

While the masked man had said he was tasked by inspector Pradeep to kill farmer leaders, there is no inspector by that name

‘Kisan parade’ in Delhi on Republic Day given green light, claim protesters, Police deny receiving any written submission regarding route: Details

Farmer leaders have claimed that they have received approval to conduct a tractor parade in Delhi on the occasion of Republic Day.

Watch: Taking offence at Jai Shree Ram slogans, Mamata Banerjee walks off stage even as PM Modi and Bengal Governor look on

Mamata Banerjee who was sharing the stage with PM Modi, lamented "being disrespected" because she heard Jai Shree Ram slogans

Noida, Ghaziabad, Prayagraj, Kanpur: Hoax bomb threats ahead of Republic Day keep Uttar Pradesh police on tenterhooks

Fear and panic has the state of Uttar Pradesh in its grips after at least six hoax bomb threats were reported from Noida, Ghaziabad, Allahabad and Kanpur

How Congress spread lies about a woman being beaten up by goons in ‘lawless UP’ while the police did nothing: Read what really happened

Recently, a video of a pleading lady requesting UP Police officers to save her from two assailants was doing the rounds on the internet.

Stripped, hung upside down, one other beaten with pipe and still in their custody: 5 big revelations by ‘Masked Man’ Yogesh about farmer leaders

On Saturday, however, masked man Yogesh has made revelations that would give everyone cause for immense concern.

Recently Popular

#BanSportsTak: Netizens angry after India Today owned sports channel claims Virat Kohli suffers from ‘disorder’

"It is a disorder for a captain to (be as aggressive as Virat Kohli). It might be acceptable for a player to have this aggression (but nor for a captain)," the journalist claimed.

Rajdeep Sardesai ‘baffled’ by India Today survey that shows Modi govt winning a sweeping majority if elections held today: Details

Taking to Twitter, Sardesai said that he was 'baffled' to see that despite the economic hardships resulted by the pandemic, Indians still love the Modi government.

How Brazil thanked India for sending Coronavirus vaccine doses: Pawan Putra Hanuman

President of Brazil, Jair Bolsonaro, has expressed his gratitude towards India and Prime Minister Modi for vaccine exports from our country.

Left-wing fury at Vir Sanghvi shows just how much ‘liberals’ hate Hindus

Vir Sanghvi published a column about the ‘shameful persecution’ of Munawar Faruqui and the ‘bogus controversy’ around Tandav

Gujarat Forest Dept to take legal action against Christian Evangelist Paul Dhinakaran over unauthorised use of the department’s logo

Website of Paul Dhinakaran claims of collaborating with the Gujarat Forest Department, a claim junked by the latter

‘I allow you housewives to have extra-marital affair with man of your choice’: Video of Mamata Banerjee’s ‘progressive’ speech goes viral

Mamata Banerjee says she is so "flexible" that she has given permission to housewives to have extra-marital affairs
- Advertisement -

 

Haryana Police confirms that the ‘masked man’ was forced by farmer union leaders to make false allegations against police

While the masked man had said he was tasked by inspector Pradeep to kill farmer leaders, there is no inspector by that name

‘Kisan parade’ in Delhi on Republic Day given green light, claim protesters, Police deny receiving any written submission regarding route: Details

Farmer leaders have claimed that they have received approval to conduct a tractor parade in Delhi on the occasion of Republic Day.

Netizens call out the hypocrisy of Star Wars on ‘bullying’ and ‘racism’ after it comes out in support of liberal actress but ignores bullying...

Despite the vitriolic and racist comments of Krystina Arielle, Star Wars somehow decided to cut her some slack.

The life and times of Vibhor Anand: A clown, fraud or simply deranged? The story of his descent into wild conspiracy theories

Vibhor Anand has spread bizarre conspiracy theories about the death of Sushant Singh Rajput and was arrested for it.

Legendary talk show host Larry King dies in Los Angeles weeks after being hospitalised for Covid-19

Larry King passed away on Saturday at age 87 at Cedars-Sinai Medical Center in Los Angeles, announced his company Ora Media

Watch: Taking offence at Jai Shree Ram slogans, Mamata Banerjee walks off stage even as PM Modi and Bengal Governor look on

Mamata Banerjee who was sharing the stage with PM Modi, lamented "being disrespected" because she heard Jai Shree Ram slogans

Noida, Ghaziabad, Prayagraj, Kanpur: Hoax bomb threats ahead of Republic Day keep Uttar Pradesh police on tenterhooks

Fear and panic has the state of Uttar Pradesh in its grips after at least six hoax bomb threats were reported from Noida, Ghaziabad, Allahabad and Kanpur

‘Journalist’ Uday Rana uses filthy language sitting next to a woman, then ‘complains’ about the woman not talking to him

'Journalist' Uday Rana whines that a lady on the fight with him did not acknowledge his "colourful" conversations

Even as ‘masked man’ Yogesh says he was tortured by farmers to lie about murder plot, Rakesh Tikait blames central govt

The Bharatiya Kisan Union (BKU) spokesperson Rakesh Tikait also alleged that a conspiracy has been hatched to kill four of them and create disturbances during their tractor rally.

AAP MLA Somnath Bharti sentenced to 2 years in jail for assaulting AIIMS staff, soon gets bail from High Court

A Delhi Court had found AAP MLA Somnath Bharti guilty of manhandling security personnel at the AIIMS and sentenced him thereof

Connect with us

245,563FansLike
496,912FollowersFollow
22,900SubscribersSubscribe