While RBI Acts Strict about Giving New Banking Licence, How Was a Director of HDIL Group Controlling PMC Bank?
The main reason why the Punjab and Maharashtra Cooperative (PMC) Bank is in deep trouble is because the bankrupt Housing Development and Infrastructure Ltd (HDIL) (tottering Dewan Housing Finance Ltd-DHFL is also of the same promoter group) had a finger in the Bank. It was not a case of one bad lending.
 
There was a close nexus between the HDIL group and the Bank through Waryam Singh, the chairman of PMC Bank. He was director of several companies associated with HDIL group and the Wadhwans.
 
PMC Bank’s managing director (MD) has been on television providing false platitudes and feigning ignorance of the loot of depositors’ money and also claiming that Mr Singh had resigned from the HDIL group in 2015. The very fact that the Bank is over-extended to this group is proof that the nexus is as strong as ever. 
 
The government and the regulator are doing a great disservice to depositors by permitting the MD to put out half-truths. Ideally, we need answers from the government. Also, like in the case of Infrastructure Leasing & Financial Services (IL&FS), we need to change management, sack those who were responsible and act fast to salvage public funds. 
 
The failure of PMC Bank is already beginning to impact even the better-run cooperative banks that are seeing worried depositors wanting to ring-fence at least a part of their funds. If the situation is allowed to fester, things can get worse. 
 
It is surprising that while the banking regulator, Reserve Bank of India (RBI), acts extremely tough about giving new bank licences, it was either completely oblivious or knew, but did nothing about this nexus. The result of this regulatory failure today is that tens of thousands of depositors are on the streets worried about their money. 
 
Following the death of Charanjit Singh Chadha on 12 January 2015, PMC Bank board elected Waryam Singh as new chairman for five years till 2020.  
 
Mr Singh, in 2009, was listed among individuals forming part of the promoter group of HDIL group in an information memorandum for issue of privately placed debentures. Even if he resigned in 2015, it is clear that the deep relationship with HDIL and its many group companies persisted.  
 
Here is what is available in the public domain.
 
Waryam Singh’s association with the Wadhwans dates back to 17 January 1997, when he was made director of DHFL Property Services Ltd from where he resigned on 27 March 2009. Before resigning in March-April 2015, Mr Singh had served as director of HDIL for almost nine years. Data from Zaubacorp.com shows Mr Singh has served as director of several HDIL group companies for several years.
 
 
 
In Blue Star Realtors Pvt Ltd, Mr Singh was allocated just one share. However, this single share establishes closeness of the relationship between him and the HDIL group. 
 
 
Mr Singh was a director of Ravijyot Finance & Leasing, another group company associated with the Wadhwans. 
 
 
Mr Singh, who is the chairman of PMC Bank, was shown as promoter of Broadcast Initiatives Ltd (erstwhile Sri Adhikari Brothers News & Television Network Ltd) in the company’s draft letter of offer in March 2011. The other promoters in Broadcast Initiatives were: Rakesh Kumar Wadhwan, Sarang Wadhwan, Ashok Kumar Gupta and HDIL Infra Projects Pvt Ltd. 
 
 
In Guruashish Constructions Pvt Ltd, Mr Singh was representing HDIL group along with Rakesh Kumar Wadhwan. 
 
 
As per data from Zaubacorp, Waryam Singh has been shown as director of 18 companies, many of them related with the Wadhwans. (see image below)
 
(Source: Zaubacorp.com)
 
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    COMMENTS

    Ranbir Lamba

    2 months ago

    Ranjit Pandey
    See law Makers have passed laws in their favour ( Anarchists). They forget it can bounce back on them. Public is so docile no one challenges till dark days come .
    A) Abdulah father made law Public Safety Act (PSA). Anyone can be taken under PSA ( not defined PSA) for 3 years . Now see His son Abbdullah 3 times CM is under house arrest & can't even challenge
    B) Custodial interrogation . A British era rule . No gravity if offence defined for custodial interrogation . Now see PC cooling heels in Tihar & eating same food + floor . Pawar + Vadra + Maya + Akihlesh extra may join bandwagon
    C) Banking laws . It is a trade off between customers & banks . No other third party is signatory for FD extra. Then how can your money be controlled by RBI. Insurance why of only one lakh . Your full Money should be ensured & RBI/ Government has to ensure security & safety of your funds as Specified in role of RBI and RBI is agent of government.
    Then how can your money be wiped off
    Because no one has challenged so far & noone has filed FIR/PIL.

    Right to property is your fundamental right & government cannot enact any act violation to it.
    It is not will of government to pass any draconian law as per wish.
    It is duty of opposition + constitutional authorities + public that Fundamental laws are not violated

    REPLY

    Govinda Warrier

    In Reply to Ranbir Lamba 2 months ago

    My understanding of evolution of law is limited and therefore am not able to immediately connect (A+B) with C. Still I agree with the point made that there's no justification in punishing depositors, the way it has happened in the case of PMC Bank from the day RBI directions have been enforced.

    B. Yerram Raju

    2 months ago

    Highly informative and investigative article. Hope the regulators read this for correction, accept their lax supervision and also pay the penalty for it and not push it to the multitude of depositors.

    Kurien Mathew

    2 months ago

    There should be a change in the law regarding the insurance in the deposits kept at the bank, an equal amount of insurance for the deposited money should be there and not one lakh of rupees which was an old law, it is high time to change this.

    REPLY

    DrRajesh Bheda

    In Reply to Kurien Mathew 2 months ago

    yes absolutely

    DrRajesh Bheda

    2 months ago

    should study the BS of DICGC as stated by you they have paid only for failure of coop banks and no other public or private bank. Every penny of deposit in the country is insured by them. A person may have any amt as deposit bank pays insurance for full amt. but only 1 lakh per person is insured. where is justice in this?. DICGC must be making huge profits unless of course they too are siphoning of money.

    Kurien Mathew

    2 months ago

    Day by day people are losing trust with the authorities at large, RBI could have controlled earlier by taking punitive actions at the right stage when the liabilities were increasing year on year though the net profits of PMC were apparently fair, now the hard-earned money of the depositors are being blocked, customers keep them on deposits seeing the liquidity in nature as on emergency and other needs deposited money is at their disposal.
    The annual audited statement of accounts gives a true picture and the regularities of filing the papers as per statutory norms might have been done, if so no restrictions even after the alarming bell raised is definitely a failure of the concerned authority.

    TIHARwale

    2 months ago

    it is common knowledge RBI inspection is a farce. Inspectors are more bothered about lunch, gift and outings organised by Bank branches inspection work is least priority. Asregardsaudit by CA firms they cannot red flag in the case of accounts as their next assignment is dependent upon keeping in good humour the bank which has power to extend assignment to CA or bring in pliable CA for audit

    REPLY

    Govinda Warrier

    In Reply to TIHARwale 2 months ago

    Any suggestions to change or improve the situation? Who should replace RBI, CAs, banks and government?

    Gopalakrishnan T V

    In Reply to Govinda Warrier 2 months ago

    It is high time to replace Cooperative banks in urban and metropolitan centres with commercial banks. Cooperative banks can be in rural areas under the Supervision of NABARD. Politicians should keep themselves away from all financial institutions including the Reserve Bank. The risk based supervisory system pursued by the Reserve Bank has only added to the risks of mismanagement and lost the real focus in sum and substance on the credit portfolio of banks. RBI should be made more accountable for its lapses on regulation and supervision. The selection of directors on banks boards ignoring completely the fit and proper criteria should undergo drastic change.

    Govinda Warrier

    In Reply to Gopalakrishnan T V 2 months ago

    Thanks. Today, I've sent a revised response to two financial newspapers. Copied below:



    M G Warrier

    Letters

    September 26, 2019

    Banking crisis

    This refers to your editorial “Co-operative crisis ” (September 26). This time around, one is afraid, the inept handling of PMC Bank mess may have an impact on the trust people had in the Indian Banking System since 1960’s. With the nationalization of major commercial banks (1969) and extension of coverage of the Banking Regulation Act to cooperatives (1966), common man believed that someone is in control of the banks in India and his savings deposited in banks were safe.

    Obviously, the action initiated by RBI imposing restrictions in the functioning of the PMC Bank is with good intentions and aimed at protecting the interests of bank’s depositors. One objective of imposing a ceiling on withdrawal from deposit account with the bank is to guard against panic withdrawals which may cause a run on the bank. Fair enough. The ceiling of Rs1000 during the coming 6 months, possibly the result of a ‘cut and paste’ approach to drafting directions needs immediate review More transparency in such measures is needed, as today, the public trust in the financial system is not very high. The inadvertent efforts to destabilize the institutional system including the limbs responsible for regulation and supervision have also contributed to the present unenviable situation. The laws applicable to primary (urban) cooperative banks with multi-state presence and large clientele need immediate overhaul. “Cooperatives” remaining a state subject should not come in the way of regulating cooperative banks under the provisions of B R Act.

    A related issue is, for the savers, the statutory provisions stipulating capital and reserves requirements including maintenance of liquid assets and the existence of deposit insurance (with a ridiculously low limit of Rs one lakh per account, though) are not found helpful in such situations. In this context, just as RBI has got its Economic Capital Framework (ECF) studied by an expert group chaired by former RBI governor Dr Bimal Jalan, GOI and RBI may consider appointing a panel of experts to study the capital and reserves framework of all banks including cooperative banks. The expert panel may also make suggestions on maintaining a national deposits protection fund under the aegis of DICGC to provide immediate relief to depositors in situations like this. A wholesale review covering adequacy of capital, liquid assets and reserves and realignment of their components may prove beneficial to the economy, as the exercise may release liquidity into the market.

    M G Warrier, Mumbai

    Ranbir Lamba

    In Reply to Govinda Warrier 2 months ago

    Clear cut case of dereliction of duties
    Punish Managers + admin + board + RBI + FM official

    B. Yerram Raju

    In Reply to Ranbir Lamba 2 months ago

    I fully agree. Move the window of punishment from depositors to Directors and RBI. Regulator is obviously winking at the happening for quite some time. All the RBI inspection reports must be reviewed.

    AAR

    2 months ago

    To me punishing depositors for mismanagement is not fair. RBI should immediately remove withdrawal restrictions.

    REPLY

    Ranbir Lamba

    In Reply to AAR 2 months ago

    Punish official for dereliction of duties

    Gopalakrishnan T V

    2 months ago

    Though the Reserve Bank's present action seems to be justifiable to prevent further damage the fact remains that depositors are taken for a ride by the bank's failure all these years and RBI's inefficiencies to take timely action in rectifying the irregularities with proper regulation and supervision. Dual control on co-operative banks is often cited as the main reason for co-operative banks failures but what are the checks and balances have been kept in place to prevent erosion of depositors money is a major question. How the Director of HDI L with poor track record as spelt out in the article could take over as the Chairman of this co-op bank needs an explanation from the authorities and banks own board of directors. The auditors of the bank should also be pulled up for their incompetence or for their involvement in covering up the deficiencies in banks accounting and working. All said depositors cannot be made to suffer in the hands of poor MANAGEMENTS of co-op banks, inefficient regulators and supervisors and others directly or indirectly involved in managing the co-op banks. They need justice and they cannot be allowed to suffer for poor governance standards.

    REPLY

    Govinda Warrier

    In Reply to Gopalakrishnan T V 2 months ago

    Absolutely right. There has to be conscious efforts to find solutions and avoid recurrence of such chaotic handling of such sensitive situations. When criminals get protection, savers (include workers, retirees, housewives and self-employed persons) who have deposited money in a fairly large bank suffer. The name PMC Bank doesn't reveal it's an urban cooperative bank. The claim that the bank is "Scheduled" give it more credibility. If in a crisis like this, no help will come from having a deposit insurance scheme, a Banking Regulation Act and a Registrar of Cooperative Societies, how common man will trust the government and the banking system? Less said, the better, about media role. Print media is hesitant to publish even responses like this.

    Govinda Warrier

    2 months ago

    Facts and figures here are self-revealing.
    Obviously, the action initiated by RBI is with good intentions and aimed at protecting the interests of bank depositors including the PMC Bank clientele. One objective of imposing a ceiling on withdrawal from deposit account with the bank is to guard against panic withdrawals which may cause a run on the bank. Fair enough.
    More transparency in such measures is needed, as today, the public trust in the financial system is not very high. The inadvertent efforts to destabilize the institutional system including those responsible for regulation and supervision have also contributed to the present unenviable situation.

    Considering the multi-state presence and large clientele with a deposit base of over Rs11,000 crore, RBI need to quickly review the withdrawal limit of Rs1000 fixed for 6 months in the case of PMC Bank. More important, the message that the present action is in the interest of the stakeholders, including depositors, of the bank has to be publicized.

    A related issue is, for the savers, the statutory provisions stipulating capital and reserves requirements including maintenance of liquid assets are not found helpful in such situations. In this context, just as RBI has got its Economic Capital Framework (ECF) studied by an expert group chaired by former RBI governor Dr Bimal Jalan, GOI and RBI may consider appointing a panel of experts to study the capital and reserves framework of all banks including cooperative banks. The expert panel may also make suggestions on maintaining a national deposits protection fund under the aegis of DICGC to provide immediate relief to depositors in situations like this. A wholesale review covering adequacy of capital, liquid assets and reserves and realignment of their components may prove beneficial to the economy, as the exercise may release liquidity into the market.

    M G Warrier, Mumbai

    REPLY

    Ranbir Lamba

    In Reply to Govinda Warrier 2 months ago

    Don't you think RBI failed in its basic duty as per their role
    Don't you think bankers & admin have failure in their duty
    Huge loss NPA who is going to infuse .
    No one
    customers & bank kyc norms is contract & trust
    Why bankers have broken trust

    Mohan Krishnan

    2 months ago

    Depositors can file a criminal case against RBI if above mentioned wilful negligence are true.

    REPLY

    Ranbir Lamba

    In Reply to Mohan Krishnan 2 months ago

    PIL can help

    Ranbir Lamba

    2 months ago

    https://www.facebook.com/143902715620459/posts/2719865724690799/?sfnsn=scwspmo


    PMC
    It is a cooperative bank by the people for the people of the people.

    Money in saving & FD is their hard earned money.

    Depositors never create NPA. The NPA is created by bankers & administrator of banks .
    Then how can customers can be harassed .
    It is main role of RBI

    Regulator and supervisor of the financial system: lays out parameters of banking operations within which the country”s banking and financial system functions for-
    A) maintaining public confidence in the system, B) protecting depositors’ interest ;
    C) providing cost-effective banking services to the general public.

    Regulator and supervisor of the payment systems:
    A) Authorises setting up of payment systems;
    B) Lays down standards for working of the payment system;
    C)lays down policies for encouraging the movement from paper-based payment systems to electronic modes of payments.
    D) Setting up of the regulatory framework of newer payment methods. E) Enhancement of customer convenience in payment systems.
    F) Improving security and efficiency in modes of payment.

    Points to ponder

    1)The customers in no way connected to RBI
    2) The contract for saving account & FD extra is with bank & customers.
    RBI is not a part of contract
    3) Then how can third party( RBI) enter into privacy & functioning
    4)The NPA is not created by customers. It is by
    Bankers + Administrator + Regulator due to Dereliction of duties.
    5) Thus as per law of land no loss can be born by customers . If rules or laws have been made favouring bankers & regulators then it amounts to Illegal monetary monopoly practices
    6)Finally RBI is bankers if bankers & Agent of government then
    No restrictions can be laid on customers money . Loss if any due to Dereliction if duties then bankers + administrator should be held responsible & Finally if government agent RBI has failed then it is duty of Government to reimburse money to customers & recover from defaulters A) maintaining public confidence in the system, B) protecting depositors’ interest ;
    C) providing cost-effective banking services to the general public.
    1) maintaining public confidence in the system, 2) protecting depositors’ interest ;
    3) providing cost-effective banking services to the general public.

    REPLY

    Jugnu Manhas

    In Reply to Ranbir Lamba 2 months ago

    Pls let me know if any group of depositors is signing collective PIL, I would like to join it. A Bank that was declared healthy by Auditors in Mar 2019 cannot suddenly go so wrong. I trust and believe in the Legacy of Sardar Charanjit Singh Chaddha jee and Mr Joy Thomas as they passionately made a good bank . Apart from my money I want to fight for the respectability of the bank, which should not get tarnished due to a fraudulent member in the team.

    Ranbir Lamba

    In Reply to Jugnu Manhas 2 months ago

    I will help in case you need help anytime. Members should lodge combined PIL so that court gives justice to all in one go & reduce multiple litigation for speedy & timely justice

    Jugnu Manhas

    In Reply to Ranbir Lamba 2 months ago

    I do feel that there is more to it than appear to the eye - and I still have trust in Joy Thomas, PMC Bank. However - I would like to have access to my savings. I fail to understand why a Secured Loan to an Individual Entity is being challenged ( his affiliation to a loss making venture is a separate Entity). If the transactions are disputed why are the Personal Bank Guarantees not being encashed? How is it possible for a Bank to be running profitably as per Financial Year disclosure report and 6 months later be going bust? If wrong doings were detected was not a warning issued/ moratorium period to rectify given - how can a declaration be made in evening to freeze all operations the next morning? PMC is an extremely well run bank for the last few years - why has the image been sullied?

    PMC Bank: Depositors Pay for Poor Supervision, Dubious Management
    On Tuesday morning (24th September), depositors of Punjab and Maharashtra Cooperative Bank (PMC Bank) woke up to news that they can withdraw only Rs1,000 from their accounts, for the next six months. The harshness of RBI’s (Reserve Bank of India’s) action on a profitable, dividend-paying bank raises an important question: What is the Bank, and the banking regulator, hiding? How bad is the situation, that it warrants such draconian action and punishes the innocent and ordinary depositors so harshly? 
     
    Although PMC Bank is largely unknown outside Mumbai, it has a unique character and is very well known to senior central bankers. But more about that later. The Bank’s customers are mainly small and medium businesses that will be devastated by RBI’s seemingly thoughtless action at a time when almost every business is facing a liquidity squeeze and financial constraints. According to sources, one businessman who had just deposited Rs10 lakh to make payments to suppliers fainted on hearing that his money was frozen. 
     
    When would such a draconian action be warranted that an administrator is appointed? Well, only if the accounts were totally fudged and its books cooked, like at Satyam Computers. 
     
    The Bank’s financials for the year ended 31 March 2019, certified by the statutory auditor, Lakdawala & Co, are excellent. It earned a net profit after tax of Rs99.69 crore and declared a dividend of 11%. Its non-performing assets (NPAs) are only 2.19%, doubtful assets are Rs26 crore and its statutory auditor’s report is squeaky clean. (See below). Is the report pure fiction? What are the dangerous ‘irregularities’ that warrant such drastic action?
     
     
    All that the depositors know has come as two messages from the Bank’s managing director (MD), Joy Thomas, informing them that the Bank had been put ‘under regulatory restriction’ for six months, promising that all effort would be made to rectify irregularities and remove restrictions in that time. Another message assured depositors that their money is safe. Later in the day, the MD claimed to Zee Business that there was an issue with the Bank’s advances and they hoped to realise their assets. 
     
    How does this mild and benign statement warrant such harsh action that hurts customers and could even cause permanent damage to small businesses? Clearly, there is a lot more and the rumour mills on social media have been working overtime. 
     
    A business channel has reported that PMC Bank may have exposure to a tottering non-banking finance company (NBFC). However, a twitter-thread dating back to November 2018, probably, provides a more plausible clue. 
     
    It says that the notorious HDIL Ltd (Housing Development and Infrastructure Ltd), which has gone into liquidation, owns 1% of PMC Bank and that it has received loans on concessional terms from PMC Bank in the form of overdraft facilities (OD). 
     
    It further says that Ravi Jyot, a financial subsidiary of HDIL, has raised money on similar lenient terms from PMC Bank. Since HDIL filed for insolvency in August 2019, these dangerous OD facilities will end up as unsecured lending and could vanish. There could be others.
     
    This realty company, with a shady reputation, has been in deep trouble for a while. An Economic Times report says that it has previously settled bankruptcy actions by Jammu & Kashmir Bank and Andhra Bank. 
     
    Can one realistically expect PMC Bank to be able to close out these irregular ODs and recover the money in six months? The RBI action indicates otherwise. With the HDIL before the NCLT (National Company Law Tribunal) and being run by a resolution professional, it is unlikely that the company will have any leeway to return PMC Bank’s money ahead of others. Given that the RBI has pressed the panic button and, literally, stopped all lending activity of the Bank, one can only assume the worst.
     
     
     
    Assuming the HDIL connection is correct, until RBI or the Bank provide any clarity, we have no idea about the size of this exposure and whether it is large enough to wipe out the Bank. 
     
    However, the next day, on 25th September, Mumbai Mirror reported that exposure to HDIL is a massive Rs2,500 crore, which would certainly take the bank down. There is no official confirmation on this. 
     
    If true, this would make PMC Bank’s case similar to that of Madhavpura Mercantile Cooperative Bank, which was brought down by its dubious lending of over Rs800 crore to scamster Ketan Parekh in 2000-01. Despite all the efforts to save it, the Bank was finally liquidated and its licence cancelled in 2012. With elections around the corner, RBI had broken its own rules to release the Rs1 lakh per depositor that is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) even before the Bank was liquidated. 
     
    One of RBI’s responsibilities is to ensure there is no run on the Bank through misinformation and worse. But the banking regulator is silent. Some senior journalists have been told that RBI alone is not responsible for the regulation of cooperative banks. They are under joint regulation of RBI and the registrar of cooperatives; neither bothers to do its job. 
     
    And, yet, there is a nice revolving door that allows senior RBI officials in the urban banks department to accepting lucrative consulting assignments with the very same cooperative banks that they supervised (or failed to supervise) after retirement. 
     
    These are accepted after a perfunctory two years and top central bankers turn a blind eye to it. Retired central bankers tell us that this is true of PMC Bank, too, and we know it is true of Bombay Mercantile Cooperative Bank.
     
    The irony is that this Bank, under former chairman, the late Charanjit Singh Chadha, used to sponsor the MR Pai Foundation Awards, in the name of the crusader for bank depositors rights. The programmes have invariably had senior central bankers as chief guests as well as awardees. 
     
    PMC Bank had a high reputation for customer service. It was open 360 days a year and had a sharp focus on computerisation and digitisation. Many cooperative housing societies had their corpus and accounts with the Bank. A look at the annual report would show that it is a Sikh community bank, which means that it had a large number of traders and businesses as customers. 
     
    As trustees of Moneylife Foundation, a not-for-profit organisation engaged in spreading financial literacy, we have always emphasised that people should not keep their money with cooperative banks, except to the extent of Rs1 lakh which is covered by the DICGC.
     
     
    The failure of one of the most reputed cooperative banks would only underline what we have been saying. Unfortunately, most depositors fail to understand the serious implications of poor regulatory accountability in India. 
     
    With elections round the corner in Maharashtra, it will be interesting to see whether RBI is again prevailed upon to bypass rules and release insurance. Or will it find a way to force those who enjoyed the ‘irregular’ advances to return the money? 
     
    The best way out will be to remove the incumbent management and find a quick buyer for the bank. Its size, past reputation of customer service and investment in technology will make it a good acquisition.
     
    But it is important that RBI calms depositors and allows a quick deal, like it did with Global Trust Bank, which also collapsed in the Ketan Parekh scam. Once the bad loans are quantified, there should be a lot of interest in this Bank. It will ensure that no depositor or customer suffers a loss.
     
    Restrictions imposed on PMC Bank
     
    1. Withdrawals of only Rs1,000 per account, also account-holders who owe the Bank money will have it adjusted from their deposits. Term deposits can be rolled over on maturity in the same name.

    2. PMC Bank cannot make any fresh loans, renew loans and advances or make any investment without prior RBI approval.

    3. It cannot borrow funds, accept fresh deposits or disburse funds or incur any liabilities without RBI approval.

    6. Regulatory restrictions will be in force for the next six months.

    7. If account-holders have any liability towards the Bank, the amount in their Bank accounts will be first used to adjust the relevant borrowing account.

    8. The Bank can make investments only in government-approved securities.

     

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    COMMENTS

    Raza Haider

    1 month ago

    BOMBAY MERCANTILE COOPERATIVE BANK DEPOSITORS & SHAREHOLDERS ARE WORRIED DUE TO FAILURE AND BAD SUPERVISION OF RESERVE BANK OF INDIA & CENTRAL REGISTRAT COOPERATIVE....

    Raza Haider

    1 month ago

    BOMBAY MERCANTILE COOPERATIVE BANK is on the verge of collapse due to forge bogus loan taken by its chairman Zeeshan Mehdi MD Shah Alam money laundring bogus expenses not making the payment of shares FDR,s to the party. Inspite of making COMPLAINTS to the R.B.I. &CENTRAL REGISTRAR COOPERATIVE NEW DELHI by the shareholders and depositers. NO ACTION is being taken by RBI and CRS..This is totally failure of supervision Observation of RBI and CRS. Because inspite of finding of fake bogus loan frauds money laundering irregularities made by Noard of directors even FIR Zhad already filed by the shareholders RBI even not responding Now the position BOMBAY MERCANTILECOOP BANK is as same as PMC. and they is not far.👇👇👇👇👇👇👇👇👇👇👇

    Raza Haider

    1 month ago

    https://youtu.be/hsy3pKLC-Hs

    P M Ravindran

    2 months ago

    I am amoung those who believe that all regulators exist to cover up failures of the authorities. Be it the information commissioners or the apex court judges.

    In may 2019 an apex court bench headed by Arun Mishra ordered demolition of 5 apartment complexes within one month. The original crime was these had been developed violating coastal zone regulations. The crime of the judges was that they had given the verdict without even hearing the affected owners, who should be considered victims of the developers and public authorities who had sanctioned the construction. Ultimately last week the bench ordered the Chief Secretary to the Govt of Kerala to personally appear and explain. The babus went on overdrive, cut off water and electricity to the 350 odd families and invited tenders for demolition. It is only now that the court had ordered the GoK to provided interim compensation of Rs 25 lakhs to each owner and recover it from the developers and public servants responsible. The court has also frozen the bank accounts of the developers now. No need to ask how effective it is expectd to be. But then justice had already been murdered when the verdict was issued without hearing the affected parties. The current actions can be likened to supplying oxygen to corpses.

    Govinda Warrier

    2 months ago

    On September 25, 2019, I responded in the media about RBI action against PMC Bank. Moneylife and The Hindu Business Line published my response online.
    Moneylife is doing an excellent job in spreading financial literacy. But, unless the print media cooperate, outreach remains limited.
    Print edition of financial newspapers which received my response in letter format opted not to publish it (they normally publish most of my responses). Today, I have sent the following to them again:

    Save Banking System

    This time around, one is afraid, the inept (being an Ex-RBite, using a mild word) handling of PMC Bank mess may have an impact on the trust people have been having in the Indian Banking System since 1960’s. With the nationalization of major commercial banks (1969) and extension of coverage of the Banking Regulation Act to cooperatives (1966), common man believed that someone is in control of the banks in India and his savings deposited in banks were safe.

    Obviously, the action initiated by RBI imposing restrictions in the functioning of the PMC Bank is with good intentions and aimed at protecting the interests of bank’s depositors. One objective of imposing a ceiling on withdrawal from deposit account with the bank is to guard against panic withdrawals which may cause a run on the bank. Fair enough.

    The ceiling of Rs1000 for withdrawal (raised to ₹10,000/- on September 26) during the coming 6 months, possibly the result of a ‘cut and paste’ approach to drafting directions needs immediate review. More transparency in such measures is needed, as today, the public trust in the financial system is not very high. The inadvertent efforts to destabilize the institutional system including the limbs responsible for regulation and supervision have also contributed to the present unenviable situation. The laws applicable to primary (urban) cooperative banks with multi-state presence and large clientele need immediate overhaul. “Cooperatives” remaining a state subject should not come in the way of regulating cooperative banks under the provisions of B R Act.

    A related issue is, for the savers, the statutory provisions stipulating capital and reserves requirements including maintenance of liquid assets and the existence of deposit insurance (with a ridiculously low limit of Rs one lakh per account, though) are not found helpful in such situations. In this context, just as RBI has got its Economic Capital Framework (ECF) studied by an expert group chaired by former RBI governor Dr Bimal Jalan, GOI and RBI may consider appointing a panel of experts to study the capital and reserves framework of all banks including cooperative banks. The expert panel may also make suggestions on maintaining a national deposits protection fund under the aegis of DICGC to provide immediate relief to depositors in situations like this. A wholesale review covering adequacy of capital, liquid assets and reserves and realignment of their components may prove beneficial to the economy, as the exercise may release liquidity into the market.

    M G Warrier, Mumbai

    Meenal Mamdani

    2 months ago

    I always thought that RBI was totally professional and worked according to rules.

    Now it looks like it has been negligent at best, or deliberately allowing some banks to bend the rules because either they enjoyed favored status with RBI officials or because of political pressure.

    All this rot did not happen in one year or even 10 years. All the previous chief Governors are culpable in this disaster; either they did not know or turned a blind eye to the rot in the system. But their job included keeping an eye on the inner workings of the RBI.

    All the hallowed names, Urjit patel, Raghuram Rajan, D. Subbarao, Y. Venugopal Reddy have much to answer.

    It is not enough to be personally incorruptible if at the same time one is an inept administrator which allows bad practices to eventually lead to havoc.

    That is why people in India often said that they would rather have a corrupt but able politician cum administrator rather than a saintly and inept politician administrator.

    Samir Kumar Das

    2 months ago

    RBI is a corrupt regulator. They audit the banks annually but do not punish the corrupt employees. They just fine a few banks. They don't act on whistleblower complaints. The RBI employees auditing the banks are either corrupt or grossly incompetent not to observe the gross violation of laws and statutory guidelines. The mess in Banking system is largely due to an inept regulator.

    Nasir Ahmed Rayadurg

    2 months ago

    How deep is this rut and how many more Banks will bite the dust. It's all Karma coming back, the old adage is true, Bankers cannot be trusted with people's money. What will finally emerge after this whole NPA, Scams, corrupt saga runs thru the system and leaves out a very few institutions to meet the aspirations of 130 crore population aiming the 5 Trillion $ mark.

    AAR

    2 months ago

    Total loans and advances is 11000 odd crores. MM reports 2500 crores lending to troubled HDIL. Can a Bank even lend 30% of total loans to one customer?

    REPLY

    AAR

    In Reply to AAR 2 months ago

    Correction: Total loans is 8000 odd crores.

    Sagar Cheulkar

    2 months ago

    Ani should quickly react , before more rumours spread. After all common man money can't be played like this. Maharashtra finance minister must take close look at this

    RAJENDRA MOHANLAL GANATRA

    2 months ago

    Shocking story of zero regulation and punishment being meted out to innocent depositors. To pass the buck of regulation to registrar of cooperative societies who knows nothing of banking is a cruel joke! The government must act on the suggestion in this article to remove the incumbent management and find a quick buyer for PMC since it is feasible, and save the depositors from any loss. Besides, the criminally profligate management which has splurged the money and caused extraordinary pains to the depositors must be immediately packed to jail.

    Our banks have habit of failing and being bailed out with public money. Their failures are not due to systemic meltdown but systematic mismanagement without any head rolling. Let's not forget that today's economic slow-down is in no small measure due to the PSB mismanagement. For too long the government has allowed PSBs to deteriorate to the point of going bust and then bailed out with recapitalisation with taxpayers' money. Merger of the banks is good since it reduces the number of nibblers, but is grossly insufficient. The merged PSBs must be subjected to management and regulatory revamp. The banks dealing with colossal amounts of money cannot be subjected to employee moral hazard. The government must now act resolutely since the country cannot afford inaction anymore!

    Failed Transactions: RBI Asks Banks to Pay Rs100 per Day Compensation for Delay in Crediting the Money
    Those customers who have been making rounds of their bank to get back their hard-earned money after a failed transactions (usually in ATMs or online), here is a good news. The Reserve Bank of India (RBI) has asked all banks to pay a penalty of Rs100 per day for the delay in crediting money in customer's account after a failed transaction. 
     
    "It has been observed that a large number of customer complaints emanate on account of unsuccessful or ‘failed’ transactions. Wherever financial compensation is involved, the same should be effected to the customer’s account suo moto, without waiting for a complaint or claim from the customer. Customers who do not get the benefit of redress of the failure as defined in the turn around time (TAT), can register a complaint to the Banking Ombudsman of RBI," the central bank said in a notification.
     
    However, these directions are applicable only for domestic transactions or where both the originator and beneficiary are within India. 
     
    A ‘failed transaction’ is one that has not been completed due to any reason not attributable to the customer, such as failure in communication links, non-availability of cash in an automated teller machine (ATM) and time-out of sessions. Failed transactions also include credits, which could not be effected to the beneficiary account due to lack of full information or lack of proper information and delay in initiating a reversal transaction.
     
    For failed transactions like cash not dispensed from ATMs, RBI has asked banks to auto-reverse the transactions within transaction date (T)+5 days. For any delay after this period, the banks is mandated to pay a compensation of Rs100 per day to the customer, automatically. 
     
    At the same time, for several online transactions, like card to card transfer, immediate payment system (IMPS), unified payments interface (UPI), Aadhaar payment bridge system (APBS), National Automated Clearing House (NACH) and prepaid payment instruments (PPIs) including cards and wallets, the banks are mandated to reverse the transaction within T+1 days. 
     
    Here is the list of transactions, its TAT and compensation to be paid to customer...
     
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