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PMC Bank Fraud: Progressively Relaxing Withdrawal Limits, RBI Tells Bombay HC
Moneylife Digital Team 19 November 2019
Economy & Nation
The Reserve Bank of India (RBI) on Tuesday informed the Bombay High Court that it has been progressively relaxing withdrawal limits for depositors of Punjab and Maharashtra Cooperative Bank (PMC Bank), and those having medical emergencies, marriages and other hardships, can approach the administrator and withdraw up to Rs1 lakh from their accounts. 
 
The Court was hearing a bunch of petitions filed by PMC Bank depositors. While asking RBI to file an affidavit enlisting necessary steps to prevent further damage to the depositors, the Court says it cannot interfere on requests for releasing more funds or change withdrawal cap on deposits imposed by RBI.
 
The central bank informed the Court that PMC Bank had indulged in camouflaging accounts through software to keep certain accounts off the records. "PMC Bank's auditor did not draw attention to this camouflaging," RBI had said. 
 
In its submission, RBI informed the Court that it had appointed one of its retired officer JB Bhoria, as administrator of the fraud-hit PMC Bank. RBI filed a detailed affidavit and also shared copies of its affidavit with petitioners about the steps taken to protect the interest of PMC Bank depositors. 
 
The counsel for RBI informed the Court that it initiated probe in PMC Bank after receiving a complaint from an insider. "Top officials of the PMC Bank were aware of the wrongdoing. We will increase withdrawal limits as entire picture emerges out of an ongoing investigation," one of the tweets from Omkar Gokhale says. 
 
 
Meanwhile, unhappy over the steps taken by RBI and the government, several depositors of PMC Bank protested outside the Bombay HC. 
 
The next hearing in this case is scheduled for 4 December 2019.
 
Separately, RBI has said that its statutory inspection for PMC Bank's position, as on 31 March 2019, reveals that the lender has disclosed only Rs439.58 crore as its exposure to Housing Development and Infrastructure Ltd (HDIL) group of companies and remaining Rs5786.43 crore remained undisclosed. 
 
Replying to a question in the Lok Sabha, Anurag Thakur, minister of state for finance, says, "The exposure to HDIL group was camouflaged or misreported to RBI and have since been classified as non-performing assets (NPAs) by the RBI, requiring huge provisioning to be made as per RBI instructions. This resulted in a steep deterioration in the financials of the (PMC) Bank."
 
As on 23 September 2019, when RBI imposed directions, total number of depositors of PMC Bank was 9,15,775. 
 
The minister says, "RBI has further stated that as this was a case of failure of management at the Board level, it was considered necessary to supersede the board of directors of the bank. Accordingly, RBI, in exercise of the powers conferred under sub-section (1) and (2) of Section 36AAA read with Section 56 of the Banking Regulation Act, 1949, superseded the board of directors of the bank on 23 September 2019 and appointed an administrator in its place for six months. An advisory committee comprising of three experienced professionals has also been appointed to assist the administrator in discharge of his duties in terms of Section 36AAA(5)(a) read with Section 56 of the Banking Regulation Act." 
 
"Withdrawals by depositors have been restricted to the notified amount. The limit for withdrawals is presently at Rs50,000 from 5 November 2019 which enables about 78% of the depositors of the (PMC) bank to withdraw their entire account balance. Further, the depositors can also withdraw on hardship grounds, including medical expenses and non-medical expenses like educational expenses of self or children, marriage expenses of self, other relatives and for livelihood, an amount up to Rs1 lakh, with a sub-ceiling of Rs50,000 for withdrawal on all non-medical grounds," Mr Thakur says in a written reply to question asked by Bhartruhari Mahtab and Rahul Ramesh Shewale, both members of Parliament (MPs).
 
According to the minister, over the past three years, there were 307 fraud cases valued at Rs183.90 crore in urban cooperative banks (UCBs). During 2018-19, number of fraud cases and amount involved had jumped significantly over those in the previous year, the reply shows.
 
Comments
Nakul Kumar Reddy
6 years ago
After talking all money from them ,I will give u some leads regarding frauds doing in the bank .
It is the scandal have u not hear to till date.
Reply
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