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One year on, struggle far from over for PMC Bank depositors with no resolution plan yet

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The RBI-appointed administrator is yet to find a resolution plan for PMC Bank as it now approaches major banks requesting a merger.

One year on, struggle far from over for PMC Bank depositors with no resolution plan yet
It has been almost a year since the Punjab and Maharashtra Co-operative Bank (PMC) scam unfolded and the solution continues to elude thousands of depositors. A Reuters report now reveals that the RBI-appointed administrator is yet to find a resolution plan for the bank as it now approaches major banks requesting a merger.
Who exposed the scam and how?
At the end of the financial year 2018-19, PMC's balance sheet declared certain numbers that wouldn't be suspicious to anyone. The total deposits in the bank stood at Rs 11,617 crore and total loans advanced amounted to Rs 8,383 crore. The gross Non-Performing Assets remained at 3.76 percent which is manageable considering India's overall NPA crisis. However, underneath these numbers was a big financial scam involving the bank's top management and Housing Development and Infrastructure Ltd. (HDIL).
It all started when a bunch of women employees of the credit department of the PMC Bank informed RBI about thousands of ghost accounts. As the news broke, thousands of depositors began withdrawing money completely from their accounts.
On September 23, 2019, RBI imposed restrictions on PMC under Section 35A of the Banking Regulation Act 1949 for six months, setting a withdrawal limit of Rs 1000. This withdrawal limit was eventually increased to Rs 1,00,000. However, depositors with large amounts in their bank accounts are still struggling as they aren't able to withdraw money beyond the set limit. The restrictions have now been extended to December 22, 2020.
After RBI audited the bank's accounts, the gross NPA spiked from 3.76 percent to 77 percent, exposing the multi-crore scam.
How did they do it?
In a nutshell, the scam involves the top management of PMC Bank that gave a huge loan to Housing Development and Infrastructure Ltd (HDIL) and its group entities by transferring 70 percent of the bank's total credit facilities to them.
Investigations revealed around 21,049 bank accounts were opened by bogus names to conceal 44 loan accounts. The bank's software was also tampered to conceal these loan accounts from the eyes of majority of its employees.
To circumvent RBI scrutiny, the loans to the tune of Rs 6,500 crore were channelized through these ghost accounts to the 44 accounts of the HDIL group. It is pertinent to note that these 44 accounts were undisclosed to the RBI. The RBI's auditor usually samples 50 to 100 accounts in any bank and for the reasons best known to the PMC officials, they never included the 44 HDIL loan accounts.
Action taken...
The Enforcement Directorate (ED) jumped into action and quickly sealed HDIL's assets worth Rs 3,500 crore and the HDIL chief Rakesh Wadhawan and his son Sarang Wadhawan were arrested. Also, former PMC Bank MD Joy Thomas too was arrested. He admitted that they had concealed the fraud in a letter written to the RBI as it would have caused a huge loss of reputation to the bank. On the contrary, HDIL has denied any wrongdoing. Currently, efforts are still underway to recover the money from HDIL.