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PMC Bank Fraud case: 2 die while ED attaches properties of Bank heads

FM Sitharaman states the government will assess required legislative amendments in PMC Bank fraud case

New Delhi, Oct 17 (UITV): Watching the condition of anguished depositors breaking down and weeping outside the branches of Punjab and Maharashtra Co-operative Bank (PMC) over the last fortnight, a sense of anger on the nationalised aand private banking instituitions emerges within every individual who has kept  about 85% of his life’s savings and when it gets stuck at the bank, with no clarity on if and when he might get the money back, can hit that helpless common man severely.
“I really don’t know what will happen to us now,” says the 72-year-old former employee with a chemical company, who stays with his wife at Dombivali in Mumbai, found PMC attractive for the higher interest rate on fixed deposits the bank offered, compared with larger state-owned or private commercial banks.

Gupte has only managed to get Rs 15,000 from his savings account and has not been getting interest on his fixed deposit, which amounts to Rs 85k annually, for five years now. A group of depositors sends periodic representations to banking authorities and the prime minister. They haven’t heard much back.
Gupte is among the tens of thousands of depositors who are faced with financial ruin as a consequence of the potential folding of a poorly managed or fraud-hit cooperative banking institution.
PMC Bank, which has been in the news for quite a while on illegaly offering loans to Housing Development & Infrastructure Ltd (HDIL), endangering deposits of more than 50,000 customers, is just the latest in a series of cooperative banks that have been placed under restrictions by the RBI. As of March 2019, 26 urban cooperative banks (UCBs) were placed under directions of the central bank for putting depositors at risk, on suspicion of mishandling and fraudulent activities. This means operations are restricted and, often, deposits are stuck. Every time a crisis such as PMC surfaces, there’s some sympathy over the plight of depositors, and debates around the need to regulate cooperative banks better. But then
the world moves on, leaving hapless depositors to pick up the pieces of their lives, and denting people’s faith in the banking system ever so slightly.

The regulatory inaction leaves room for the next crisis at another bank somewhere else. The reasons seem unclear enough as why the nation has institutions that are called banks but are not completely within the acumen of mainstream banking regulations? Especially in a developing country like India with less financial awareness where depositors sometimes realize the difference only after they lose ever penny they have saved throughout their life?

The answer is complicated, and any potential regulation requires consent build-up among differing parties, such as central and state institutions. Such an obstacle has always blocked the way of an effective regulation uptill now. Now, however, Finance Minister Nirmala Sitharaman has said the government will assess if legislative amendments are required to implement progressive regulation. If that happens, it might just be the silver lining on the PMC crisis.



Co-operative Banking institutions account for about 8% of deposits and 9% of advances and loans in India. Periodic tumult notwithstanding, they remain essential to the banking ecosystem in some ways, especially at the lower end of the income pyramid.
''Co-operative banks are still relevant because they cater mostly to first-time borrowers who may not be looked at positively by public-sector banks or private banks. We understand these borrowers because we come from the same ecosystem,” says Gautam Thakur, chairman of Saraswat Co-operative Bank, India’s largest scheduled UCB by assets.
While this is true, Co-operative erative banks charge a higher rate of interest on loans to compensate for the higher risk, and consequently are able to offer more attractive rates to depositors.

R Gandhi, former deputy governor of the RBI, does not think the problem lies in the ownership structure of co-operative banks. “In fact, dispersed ownership is good. The problem is, in a co-operative structure, you cannot have a professional board.” The board of directors of a co-operative bank is elected by the bank’s members and the process is often interrupted by politicians to gain control of the bank. Politicians also wield a lot of influence in other co-operative institutions, such as sugar mills in Maharashtra. In many states, political control of such institutions plays a significant role in the maintenance of the networks of political patronage, through loans as well as jobs at such institutions.



Meanwhile, The ED on Tuesday stated it had seized movable and immovable assets worth Rs 3,830 crore owned by HDIL, its directors/promoters, PMC Bank officials and other related entities in the PMC Bank fraud case. Apart from three hotels and the Sindhudurg plot, the agency has already identified/seized their luxury cars, yacht and aircraft, jewellery, bank fixed deposits and land plots in Mumbai, Hyderabad and Noida. Amongst other seized goods include cash, private jets, Rolls Royce, Bentley recovered from Wadhawans, Waryam Singh.

The ED had begun an investigation under the PMLA against HDIL, its promoters and PMC officials - Joy Thomas and Waryam Singh - after the Economic Offences Wings (EoW) of Mumbai Police registered an FIR against them. The FIR alleged that Rakesh and Sarang and their group companies, in conspiracy with PMC Bank officials, cheatingly availed loans and cheated bank of around Rs 4,355 crore.

Two of the deceased PMC account holders were said to be upset following the crisis and died of heart attack while the third one committed suicide. Less than 24 hours after 51-year-old Sanjay Gulati died of cardiac arrest after returning from a protest in the PMC Bank issue, another PMC Bank customer Fattomal Punjabi also died due to heart attack, media sources reported.

Dr Nivedita Bijlani a 39 year old resident is said to commit suicide her life by taking overdose of sleeping pills at her residence in suburban Versova late Monday evening, PTI reported. She is said to have deposits of over ₹1 crore with PMC Bank. The police, however, has denied any link of the PMC Bank issue with her suicide.
Gulati, who had recently lost his job with collapsed airline Jet Airways, had kept his lifelong savings of ₹90 lakh in the bank. He was in regular need of cash to pay for medical bills of his specially-abled son.