Imagine you being locked out of your savings, all your hard-earned money gets unusable with just an announcement.
No I’m not talking about Demonitization.
I’m talking about the Punjab & Maharashtra Co-operative Bank, the one whose operations got restricted by RBI due to high risks on 24 September.
#NEWSFLASH | PMC Bank has been put under regulatory restriction under Section 35A of B.R. Act by @RBI for a period of 6 months due to irregularities disclosed to RBI.
— CNBC-TV18 (@CNBCTV18Live) September 24, 2019
PMC Bank cannot accept fresh deposits or give new loans under RBI’s directive pic.twitter.com/lp0rMPHRb3
People can now withdraw only ₹1000 from their accounts over a period of six months. Your own money is now locked in a bank which you cannot use.
The Bank isn’t allow to open new branches, renew fixed deposits, invest money and take fresh deposits.
After a lot of pressure from the public, the limit was increased to ₹10,000 but it is not a huge relief for the people, especially the common man and businessmen having current accounts. ₹10,000 will barely get you to survive with your family for a few weeks. Those who had saved for weddings or a new house must be facing huge problems as well.
What led to this decision by RBI?
This chaos happened just because of one bank account.
The account was of HDIL, a real-estate firm which is now bankrupt, who owes the bank ₹2,500 crores. The auditors at PMC bank did not classify this loan under NPA (Non-performing asset) despite HDIL defaulting on loan payments.
RBI had to step-in and put restrictions citing several regulatory lapses especially heavy underreporting of NPAs.
The video below explains the scenario, including what would happen to the money of PMC Bank Customers:
Why RBI put restrictions on PMC Bank and what happens to your deposits when such restrictions are placed? https://t.co/rKmcFmy32H pic.twitter.com/T4U9MMIe8n
— Economic Times (@EconomicTimes) September 27, 2019
A Bigger Fraud Than The Nirav Modi Fraud
CNBC-TV18’s @latha_venkatesh explains why “the fraud perpetrated at Punjab & Maharashtra Co-operative (PMC) Bank is not much smaller than the one at the Punjab National Bank (PNB)”.https://t.co/FnUQgt1q6L
— CNBC-TV18 News (@CNBCTV18News) September 30, 2019
The article explains how the current chairman of the bank Waryam Singh was director on the board HDIL till 2015, and earlier the director on board of DHFL. Both the companies are promoted by brothers, Saran and Kapil Wadhawan.
It further states that it might be possible that the management misreported the sector of the loans they have provided. This failed to come in the attention of statutory auditors.
PMC faked loan records to under-report the NPA and presented to RBI. It also deliberately kept NPA information hidden from RBI.
It is also possible that HDIL created a number of small companies due which they failed to come under the notice of RBI’s database of large stressed loans, CRILC (Central Repository of Information on Large Credits).
Bigger Co-operative banks such as PMC are supervised every year. It would be difficult for RBI to explain why this blunder happened.
Suspended MD has admitted PMC bank was breaking RBI rules since past 6-7 years and had a long relationship with HDIL.
This man has essentially admitted to brazen fraud and cooking the books. why is #sfio @CPMumbaiPolice @MumbaiPolice #EOW not arresting him & chairman for #PMCBank failure? Nobody questioning auditor Lakdawala yet. Most CAs don’t even know him! @arungiri @patelameet @Dev_Fadnavis pic.twitter.com/QMsAUDR0wh
— Sucheta Dalal (@suchetadalal) September 28, 2019
Co-operative Banks used by politicians as their personal piggy banks
This twitter thread by @memeghnad explains how this has been happening since years now:
In case you’re wondering how politicians use cooperative banks as their personal piggy banks, here’s how it works.
#PMCbank thread 👇
Step 1: People known to politicians are appointed as directors. Can be a son/daughter/friend/peon/driver.
They’re all just proxies so it doesn’t matter whether they are educated or not. They don’t even need to pay attention to the functioning of the bank.
Step 2: Entice hardworking people to deposit their money in this bank.
Pretty self-explanatory.
Step 3: Give out loans from the bank to friends and family.
Since the directors are ‘apne ghar ke log’, this is quite easy to do. Doesn’t matter if the entity they are giving loans to has the capacity to pay back or not. Of course.
Step 4: Feed fat lunches to auditors (Chartered Accountants) during audits to make them look the other way.
Yeah. These audits are a joke. Starving underpaid interns do it mostly. Nobody ever blames the CAs after shit goes down, so who cares anyway.
Step 5: Give a nice cut from the loans to party and leader as donations.
Again, pretty self-explanatory. Now we have these fun things called electoral bonds to ensure these things are anonymous too! So… yaay!
Step 6: Never pay back loans. Instead, take more loans to start paying back installments of previous loans.
Yeah. They take more loans to pay back parts of previous loans so that they always stay above the NPA radar. Managers know this, but… meh.
Step 7: PROFIT!!!
Of course.
In this amazing wonderland, shit usually goes down when the party in power changes & elections are on the horizon.
Then, suddenly, authorities take a look at the books, find shittiness happening there for years and then take action. Once elections are over, rinse and repeat.
You can already see this happening.
Election times are fun times.
*ba dumm tss*ED Registers case against Sharad Pawar, 70 others in Maharashtra cooperative bank fraud case:
https://www.moneycontrol.com/news/business/ed-registers-case-against-sharad-pawar-70-others-in-maharashtra-cooperative-bank-fraud-case-4471211.html …
And, of course, everybody is involved.
Look closely and you’ll find connections to every party that matters, one way or another.Day After Payout Freeze PMC Banks Link With BJP Emerges:
https://mumbaimirror.indiatimes.com/mumbai/other/day-after-payout-freeze-pmc-banks-link-with-bjp-emerges/articleshow/71302355.cms …
Now, look at this lady. Look at her closely. Feel her pain.
People like her are the ones who suffer because of this giant scam which has been happening for decades.
https://twitter.com/i/status/1176860652649926656
For the past few days people who have read my book are pointing out similarities with #PMCbank and how I predicted the future.
Trust me, I didn’t. This has happened before.
But hey, buy my book #Parliamental! Thnx! https://www.amazon.in/dp/935357059X/ref=cm_sw_r_cp_apa_i_qOeJDbEM89KQB …
How in the world can this fraud go on for 10 years without anyone red flagging it?!
#PMCbank gave 73% of ALL its loans to ONE company, which went bankrupt, and nobody noticed? How is this even possible!
https://economictimes.indiatimes.com/industry/banking/finance/banking/over-two-thirds-of-pmcs-loan-exposure-is-in-hdil-group/articleshow/71367179.cms …
You can follow @Memeghnad.
The cycle will continue, while the government amends laws to make everything as secretive as possible.
Why do the common people have to suffer?
Lakhs of people are having sleepless nights over this decision. People have their savings accounts, current accounts, fixed deposits and what not in the bank while the bank refuses to give them their own money back.
Look at some accounts below which will sadden you while we clearly cannot do anything regarding the same.
This video made me extremely sad. A man can’t even withdraw his money from #PMCbank because of RBI’s order that only Rs. 1000 per 6 months can be withdrawn from one account.
— Jayvijay Sachan (@JayvijaySachan) September 26, 2019
People are suffering but no one is talking about this major issue. #PMC_BANK 😔 pic.twitter.com/GZBuyWnRL7
Just a day after our PM who was in US declared “Everything is fine in India”, Punjab Maharashtra Cooperative (PMC) Bank following the guidelines of RBI, does this to its customers.
— Pruthvi Raj D V (@pruthvirajdv) September 25, 2019
Its really sad to see hardworking people suffer like this.#PMCBank pic.twitter.com/TaP3L8bx7k
People voted for Modi anticipating 15 lakh in every bank account.
— Vinay Chaganti (@aa_addict) September 25, 2019
Now they can’t even withdraw more than 1000₹ from their own hard earnings.
Sab Changa Si
Everything is fine.#PMC_BANK #Pmcbank pic.twitter.com/8E31zV936Q
When Demonitization happened, one of it’s main motives were said to be to digitize, encourage and increase cashless economy. People were forced to deposit all their savings in banks. Now that you have all your savings in the bank, you cannot withdraw them.
Home isn’t safe to store money.
Banks aren’t safe to store money.
Where do people keep their money then?
This has happened earlier with many other banks as well.
1/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
The Reserve Bank of India (RBI) imposed restrictions on the Punjab and Maharashtra Cooperative Bank (PMC) on September 24. The customers of the bank could withdraw only Rs 1000, which was relaxed to Rs 10,000 on September 26, from the bank due to the restriction.
2/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
Kapol Cooperative Bank | The Mumbai-based Kapol Cooperative Bank was placed under directions on March 31, 2017. The withdrawal cap was set at Rs 3000 per depositor. The bank continues to remain under directions till January 2020, as curbs were extended several .
3/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
Rupee Cooperative Bank | The RBI imposed directions on Rupee Cooperative Bank on February 22, 2013. While the bank is still functioning, depositors have not yet been given access to their funds. The bank did release some money for exceptional cases with relaxation from RBI.
5/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
The Needs of Life Cooperative Bank | The Mumbai-based bank was placed under directions from October 29, 2018. After an extension, its next review date has been set on October 29, 2019. The bank was in news for several frauds and irregularities.
6/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
Youth Development Cooperative Bank | The Kolhapur-based bank was placed under directions on January 5, 2019, for a period of six months. On review, the regulator extended the restrictions by another six months till January 5, 2020. The bank has 14 branches in the city.
7/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
Shivam Sahakari Bank | The bank based in Ichalkaranji, Kolhapur, was placed under directions on May 19, 2018. After several extensions, its next review date has been set on October 19, 2019.
8/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
The City Cooperative Bank | The Mumbai-based bank was placed under directions on April 17, 2018 and received three extensions. It’s next review date is on October 17, 2019. In all, it has 10 branches in Mumbai. It had deposits worth Rs 440 crore as on March 2019.
9/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
Maratha Sahakari Bank | The bank was put under directions on August 31, 2016 and still operating with restrictions. Its next review date is on September 30, 2019. (Image: Reuters)
10/10
— Ruchi Sabharwal (@RuchiSabharwal4) September 28, 2019
Karad Janata Sahakari Bank | The bank was placed under directions on November 7, 2017. After several extensions, the bank’s next review date is set on March 2020. (Representative Image: Reuters)
While the RBI and bank officials who are responsible roam free without worries, it is the common man who bears the pain every time.
Do we need to get Bank’s KYC now just like they forcefully took ours?
As the largest democracy, the government should atleast accept that it was a failure on someone’s part and hold someone responsible. You just cannot lock away savings of common people like that.
Finally, a SIT has been formed to probe the case. I hope people get justice and their own money back.
Mumbai Police files a case against HDIL in the #PMCBankScam, special investigation team to probe the case.https://t.co/JFH7xMjEeT
— BloombergQuint (@BloombergQuint) September 30, 2019
But regardless of the economic slowdown India is facing along with Kashmir Blackout, Modiji tells the NRIs “All is well. Sab changa si. Maja Ma Chhe.”
