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Did PMC Bank play favorites? Bank saw massive cash withdrawals before RBI clampdown

Sabrangindia 01 Oct 2019

49 broken FDs accounted for withdrawal of Rs. 16 crore, put the bank under severe strain


Image result for Did PMC Bank play favorites? Bank saw massive cash withdrawals before RBI clampdown
Image Courtesy: MSN.com

Frantic cash withdrawals by a few large depositors of the now paralyzed Punjab and Maharashtra Cooperative Bank in the third week of September, apparently following a whistleblower leak, prompted the RBI to put curbs on the troubled bank, a person aware of the matter reported. A report in Mumbai Mirror lays this out.

The withdrawals that started on September 19, amounted to more than 5% of the total deposits on some days, a person on the condition of anonymity said.

The identity of the depositor (or depositors) withdrawing these quantum deposits could not be ascertained and will be disclosed once the RBI completes its inspection.

The whistleblower report has detailed the massive misreporting of NPAs by the bank, primarily because of huge exposure to crippled developer HDIL that owes around Rs 6,500 crore to the bank-as much as 73 percent of its total loan book--as per the whistleblower and also its suspended MD Joy Thomas' admission to the RBI.

Confession Letter

The confession, in the form of the letter came after a board member leaked the actual balance sheet details to the RBI. The whistle-blower approached the regulator and provided information about financial irregularities and the real estate company’s loans not being classified as non-performing since the last two-three years, despite defaults on repayments.

MD Joy Thomas wrote a four-and-a-half page letter to the regulator giving details of how he, along with six others, including a few board members and Chairman Waryam Singh, were sanctioning loans to HDIL.

Thomas said in his letter that these large accounts missed the notice of statutory auditors as they were checking only for incremental advances and scrutinized only those accounts, which were shown to them.

In a press conference last week, Thomas said the bank’s exposure to HDIL and its related entities was to the tune of ₹2,500 crores and that there was a delay in repayments by the group since the last two-three years.

But the letter said that the bank’s actual exposure to the bankrupt real estate developer is over ₹6,500 crore—four times the regulatory cap or a whopping 73% of its entire assets of ₹8,880 crore.

The letter said the cooperative bank was using fictitious accounts to evade RBI’s regulatory scrutiny during its annual inspection.

In the press conference, Thomas said, the exposure was not reported during the past six-seven years and the management came clean to RBI on September 19 during a meeting with RBI executive director Rabi Mishra.
 
Thomas also said the bank sanctioned a loan of ₹96.5 crore to the group so that they could repay Bank of India and avoid bankruptcy. He added that this loan was, however, not approved by the board of the cooperative bank.

“The stressed legacy accounts belonging to this group were replaced with dummy accounts to match the outstanding balances in the balance sheet. As the loans were mentioned as loans against deposits and were of lower amounts, they were never checked by RBI," the letter read.
 
“I’ll kill myself outside the RBI building”

These words of Satinder Singh must reverberate through every corner of the country. By giving to access to their savings, the RBI has robbed the people of their basic human rights.

Satinder Singh, 42, the son of a taxi driver who had transcended his humble origins through sheer hard work, sees his savings of Rs. 2.6 crore under lockdown.

Singh, an NRI who works as a dynamic positions operator in the oil rig industry and is currently out of the country, doesn’t know how he will face his parents when he returns. He says they know that the bank is in trouble, but don’t know that the whole family faces doom if the bank doesn’t repay their money. Singh, who was also supposed to schedule a knee replacement surgery for his ailing mother, doesn’t know what answer to give her.

Singh and his family chose PMC Bank as their banking partner because of its convenient timings and because they liked the professionalism of the staff and the way they treated their customers.

Singh has a salary account with Axis Bank with the help of which he may just scrape by. But what about the less fortunate who do not?
72 year-old Dhapu Jain and her daughter-in-law Priyal had invested a total of Rs. 1 lakh in three fixed deposits. Outside the PMC Bank, screaming at the officials she said, “I should kill her and end my life too! How do we survive when all our money is taken away from us?”
Mohan Jain who exchanged tattered notes for a living for 40 years only recently began saving up money. With all of his FDs locked up he has no idea what to do next. He and his family have not been able to eat anything since the news of the clampdown on the bank.

The Mumbai Police on Monday filed a case against the ousted management of PMC Bank and the promoters of HDIL. The Economic Offences Wing (EOW) has formed a Special Investigation Team (SIT) to probe the matter. The first information report (FIR) has been filed under sections 409 (criminal breach of trust by a public servant or banker), 420 (cheating), and 465, 466 and 471 (related to forgery) of the Indian Penal Code along with 120 (b) (criminal conspiracy).
 
Related
RBI puts Mumbai based PMC under restrictions, Chaos reigns outside Bank’s Branches
Disaster Day for PMC Account Holders: Acute Customer Distress on Twitter
 
 

Did PMC Bank play favorites? Bank saw massive cash withdrawals before RBI clampdown

49 broken FDs accounted for withdrawal of Rs. 16 crore, put the bank under severe strain


Image result for Did PMC Bank play favorites? Bank saw massive cash withdrawals before RBI clampdown
Image Courtesy: MSN.com

Frantic cash withdrawals by a few large depositors of the now paralyzed Punjab and Maharashtra Cooperative Bank in the third week of September, apparently following a whistleblower leak, prompted the RBI to put curbs on the troubled bank, a person aware of the matter reported. A report in Mumbai Mirror lays this out.

The withdrawals that started on September 19, amounted to more than 5% of the total deposits on some days, a person on the condition of anonymity said.

The identity of the depositor (or depositors) withdrawing these quantum deposits could not be ascertained and will be disclosed once the RBI completes its inspection.

The whistleblower report has detailed the massive misreporting of NPAs by the bank, primarily because of huge exposure to crippled developer HDIL that owes around Rs 6,500 crore to the bank-as much as 73 percent of its total loan book--as per the whistleblower and also its suspended MD Joy Thomas' admission to the RBI.

Confession Letter

The confession, in the form of the letter came after a board member leaked the actual balance sheet details to the RBI. The whistle-blower approached the regulator and provided information about financial irregularities and the real estate company’s loans not being classified as non-performing since the last two-three years, despite defaults on repayments.

MD Joy Thomas wrote a four-and-a-half page letter to the regulator giving details of how he, along with six others, including a few board members and Chairman Waryam Singh, were sanctioning loans to HDIL.

Thomas said in his letter that these large accounts missed the notice of statutory auditors as they were checking only for incremental advances and scrutinized only those accounts, which were shown to them.

In a press conference last week, Thomas said the bank’s exposure to HDIL and its related entities was to the tune of ₹2,500 crores and that there was a delay in repayments by the group since the last two-three years.

But the letter said that the bank’s actual exposure to the bankrupt real estate developer is over ₹6,500 crore—four times the regulatory cap or a whopping 73% of its entire assets of ₹8,880 crore.

The letter said the cooperative bank was using fictitious accounts to evade RBI’s regulatory scrutiny during its annual inspection.

In the press conference, Thomas said, the exposure was not reported during the past six-seven years and the management came clean to RBI on September 19 during a meeting with RBI executive director Rabi Mishra.
 
Thomas also said the bank sanctioned a loan of ₹96.5 crore to the group so that they could repay Bank of India and avoid bankruptcy. He added that this loan was, however, not approved by the board of the cooperative bank.

“The stressed legacy accounts belonging to this group were replaced with dummy accounts to match the outstanding balances in the balance sheet. As the loans were mentioned as loans against deposits and were of lower amounts, they were never checked by RBI," the letter read.
 
“I’ll kill myself outside the RBI building”

These words of Satinder Singh must reverberate through every corner of the country. By giving to access to their savings, the RBI has robbed the people of their basic human rights.

Satinder Singh, 42, the son of a taxi driver who had transcended his humble origins through sheer hard work, sees his savings of Rs. 2.6 crore under lockdown.

Singh, an NRI who works as a dynamic positions operator in the oil rig industry and is currently out of the country, doesn’t know how he will face his parents when he returns. He says they know that the bank is in trouble, but don’t know that the whole family faces doom if the bank doesn’t repay their money. Singh, who was also supposed to schedule a knee replacement surgery for his ailing mother, doesn’t know what answer to give her.

Singh and his family chose PMC Bank as their banking partner because of its convenient timings and because they liked the professionalism of the staff and the way they treated their customers.

Singh has a salary account with Axis Bank with the help of which he may just scrape by. But what about the less fortunate who do not?
72 year-old Dhapu Jain and her daughter-in-law Priyal had invested a total of Rs. 1 lakh in three fixed deposits. Outside the PMC Bank, screaming at the officials she said, “I should kill her and end my life too! How do we survive when all our money is taken away from us?”
Mohan Jain who exchanged tattered notes for a living for 40 years only recently began saving up money. With all of his FDs locked up he has no idea what to do next. He and his family have not been able to eat anything since the news of the clampdown on the bank.

The Mumbai Police on Monday filed a case against the ousted management of PMC Bank and the promoters of HDIL. The Economic Offences Wing (EOW) has formed a Special Investigation Team (SIT) to probe the matter. The first information report (FIR) has been filed under sections 409 (criminal breach of trust by a public servant or banker), 420 (cheating), and 465, 466 and 471 (related to forgery) of the Indian Penal Code along with 120 (b) (criminal conspiracy).
 
Related
RBI puts Mumbai based PMC under restrictions, Chaos reigns outside Bank’s Branches
Disaster Day for PMC Account Holders: Acute Customer Distress on Twitter
 
 

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