HSBC, Its Ex-CEO Robert Milne & Executives Named in FIR for Defrauding Senior Citizens for Rs1.48 Crore
The Mumbai police has finally registered a first information report (FIR) against The Hongkong and Shanghai Banking Corp Ltd (HSBC) India, its former chief executive officer (CEO) Stuart P Milne, Priya Paul, relationship manager and several top officials of the Bank and its subsidiary, Canara HSBC OBC Insurance Co, for defrauding a very senior citizen and his family. According to the FIR, one Priya Paul, who was relationship manager, sold 83-year Rusi Postwala and his family members several insurance policies by redeeming his investments in mutual funds, under the pretext of ensuring better return on investment. Mr Postwala, his wife Rusi and daughter Khushnuma Behram suffered a loss of Rs1.48 crore, as per the FIR. 
 
The FIR, a copy of which has been seen by Moneylife, names Ms Paul, Ms Jhumar, head of premier banking at HSBC's main branch, Vaishali Chauhan, manager of the same branch, Chirag Jain, chief operating officer (COO) of HSBC main branch, Stuart P Milne (the then CEO) of HSBC India, Ramakrishna S, head for retail banking and wealth development at HSBC, Animesh Raizada, head for wealth management at HSBC and Mayur Patni, head for customer relations at the Bank.
 
Initially, the Mumbai Police closed the file stating that there was no need to investigate the matter since no offence was made out. It was only when Mr Postwala and Ms Behram approached the State Police Complaints Authority, which observed and remarked that cognizable offences are made out in this case, the FIR was registered, after a gap of two years.
 
Ms Behram, in her complaint says, "...the accused officials of HSBC Bank and Canara HSBC OBC Insurance Co, with an intention to obtain handsome commission had committed offences of forgery, fraud, cheating, criminal breach of trust by forging signature of my daughter in the proposal form and filing wrong information of myself and my father and misappropriation of funds of my father and myself to the tune of Rs1,47,57,837 crore..."
 
Ms Behram, who is the daughter of Mr Postwala, filed the complaint. Describing the allegedly fraudulent ways used by HSBC officials, she says, "Around July 2013, Priya Paul informed my father in my presence that he should have a well balanced portfolio and since he already had equities and mutual funds, it would be better for him to put Rs5 lakh into insurance. When she realised that we were reluctant, she purposely misinformed us that it would be one time investment and would earn returns of about 8%, a comparatively safer option to investments in mutual funds. Ms Paul had intentionally never informed him that the insurance policy she was selling him was a recurring nature of five continuous years and his money would be locked for 10 years from the date of first premium."
 
According to Ms Behram, the relationship manager from HSBC told the family that since Mr Postwala was 80 years old, he was not eligible for insurance and the additional side benefit would be given to them as life assured. Ms Paul then made Ms Behram and her two daughters to sign on two policies as life assured and made them to undergo medical tests for two policies. 
 
Over the next year, Ms Paul continued to assure the family that she is handling the portfolio of Mr Postwala and they should not worry about it.
 
When in 2013-14, Mr Postwala needed some money for investing in a new shop and for construction work at his property in Alibaug, he and the family, including Ms Behram, requested Ms Paul to liquidate his mutual fund investments. However, Ms Paul repeatedly told them that since their mutual fund investments are giving good returns they should sell their investment in shares. 
 
However, when the family found that no interest or dividends were being received by them, they called Ms Paul for a meeting. During the meeting, Ms Paul told them that she had redeemed nearly all mutual funds of Mr Postwala and put all the money in two insurance policies. "We were shocked to know that Ms Paul had redeemed all of my father's mutual funds and diverted the monies to insurance policies without our knowledge. Unknown to us, she had been redeeming almost all of my father's mutual funds and investing this in more and more insurance policies and in turn to meet the premium demands for the same, she kept on redeeming more and more of mutual fund units," Ms Behram says.
 
Then, on 20 March 2016, Mr Postwala and Ms Behram approached Ms Jhumar, head for premier banking at HSBC's Fort branch. During the meeting, Ms Paul admitted that she had invested in four policies and since she had redeemed all mutual fund investments, except one, of Mr Postwala, for paying premium of the policies, she liquidated mutual fund investment in one scheme of Ms Behram as well. Ms Jumar promised detailed enquiry in the matter, but nothing happened. In fact, Ms Behram says, "we called up Ms Jhumar many times as well as personally went to the bank a few times to meet her, but she refused to accept our calls or even meet us."
 
When the family escalated the issue to the branch manager Ms Chauhan, they were promised the same things that were promised by Ms Jhumar. But there was no progress. 
 
Ms Behram then asked the Bank for all her bank statements as well as those of her father for the period from 2012 to 2016. "On perusal of my father's bank statements, annual dividend and mutual fund statements, I noticed that all his mutual funds, except one, had been liquidated and monies received in his savings account been immediately used to pay premiums for Canara HSBC Life Insurance policies," Ms Behram says in her complaint. "One of my mutual fund investment was also redeemed and the redeemed amount of Rs1.50 lakh was paid to the same insurance company as premium for a policy," she adds. 
 
According to the complaint filed by Ms Behram, there were a lot of discrepancies and wrong information, including personal details, income and health that was filled in the insurance policy documents. Ms Behram also found one know-your-customer (KYC) form supposedly filled by her, when she was not even present in India.  
 
In addition, the HSBC Bank official had also withdrawn a sum of Rs31.30 lakh from the public provident funds (PPF) account of Mr Postwala, his wife Dhun and daughter Ms Behram on 22 April 2013. Value of these PPF investments would have been Rs45.09 lakh as on 12 March 2018.
 
The family was also made to sell their shares worth Rs38.12 lakh, which would have been valued at Rs41.02 lakh as on date, including the dividends.
 
Ms Behram and her father tried to escalate this issue with senior officials of HSBC Bank and Canara HSBC OBC Insurance Co as well as Reserve Bank of India (RBI), the Banking Ombudsman, and Insurance Regulatory Development Authority of India (IRDA). But they did not receive any response. 
 
They succeeded in having the FIR filed due to the help they received from former Mr Mahesh Athavale, a former police officer and lawyers, who had worked in the economic offences wing (EOW) of Mumbai police and investigated several financial crimes.  
 
Few months ago, they approached Moneylife Foundation, where counsellors suggested that the best recourse for them was to file police complaint to get justice. 
 
Responding to Moneylife's mail, an official from HSBC says, "We value our customers and take seriously all concerns and issues raised by them. We are aware of this matter and have provided full support previously to the multiple investigating authorities that were approached by the customer. We are ensuring full cooperation to the ongoing investigation and remain committed to resolving our customer complaints fairly." 
 
This is not the first time that officials of HSBC Bank have cheated its own customers. In March 2014, under pressure from the regulators, HSBC had settled and closed its five-year-old dispute with singer-actress Suchitra Krishnamoorthy.
 
While the settlement did not permit her to reveal the amount, we learnt that this case of gross mis-selling and customer abuse was been amicably closed. Moneylife Foundation had relentlessly pursued this case for over two years. (Read: HSBC agrees to compensate Suchitra Krishnamoorthy)
 
Moneylife published an expose in April 2012 on how HSBC looted Ms Krishnamoorthy for over five years by promising an extravagant assured return of 24% from mutual funds as well as insurance.
 
In November 2013, market regulator SEBI sent a strongly-worded notice to HSBC asking the lender to explain why its acts in handling the portfolio of Ms Krishnamoorthy were not in violation of its regulations governing fraudulent and unfair trade practices and violation of the code of conduct governing mutual fund distributors.
 
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    COMMENTS

    KAVIRAJ B PATIL

    3 weeks ago

    To avail of locker facility, my relative opened an account with a large PSU bank. To avail locker, the manager insisted on one lakh FD and this was also done. To his surprise, instead of a FD, the relative received a insurance policy for that amount. Isn't this also a form of cheating?

    REPLY

    Sucheta Dalal

    In Reply to KAVIRAJ B PATIL 3 weeks ago

    It is a fraud. If there is any documentation and if your relative had checked the forms that he signed, he can file a complaint. At the very least he should ask for the original form on which he signed to check if there was any forgery or tampering.

    Subhash Chand Garg

    4 weeks ago

    This is the hallmark work style of the so called efficient MNC's

    Vaibhav Dhoka

    4 weeks ago

    No body learns from others reported complaints,and falls prey to such tactics.Therefore RBI,SEBI,IRDA withdraw permission to bankers.

    Rajnish Surve

    4 weeks ago

    Good the HSBC deserved this. The bank is involved in terrorist funding activities should be punish by the Indian government.

    CHANDRASHEKHAR VINAYAK KAKATKAR

    4 weeks ago

    Does this mean, that no communication by way of SMS/Emails/Courier/Post was received by Postwala family ?
    Was that also manipulated by the RM/Bank ?

    Suketu Shah

    4 weeks ago

    All wealth managers are the same.All shd be blacklisted.

    REPLY

    Rajesh Kothari

    In Reply to Suketu Shah 4 weeks ago

    My experience with most wealth or relationship managers is negative. Their sole interest is their target. Once you succumb to his game plan he stops serving or answering you.

    Vikas Gupta

    In Reply to Suketu Shah 4 weeks ago

    right.

    SATISH MADHAV

    4 weeks ago

    The malaise can be traced to the performance metrics and quotas fixed for bank employees.In the last 20 years with a multi national bank as an account holder,I have seen more than 30 Relationship Managers come and go as they cannot meet their quotas and are forced out.Only one lasted for more than a year.When they are under such high pressure to get business and commissions,some turn to outright fraud.
    Banking should be just that and banks must not be allowed to turn into brokerage houses selling mutual funds and insurance.

    REPLY

    Rajesh Kothari

    In Reply to SATISH MADHAV 4 weeks ago

    Agree strongly that banks should not be allowed to sale financial and insurance products. Since they have access to our bank account they know who has surplus to invest.

    SATISH MADHAV

    In Reply to Rajesh Kothari 4 weeks ago

    Exactly right.Once,I had received some outstanding payment and deposited it into the SB account of a domestic private bank.The RM alerted the director of private banking who tried his best to con me into investing it in a worthless ULIP scheme which had the highest upfront "investment fee".I stood firm and refused point blank which made him get very angry.
    This is how they operate.They try to sweettalk you into falling into an elaborately laid trap.

    Vikas Gupta

    In Reply to SATISH MADHAV 4 weeks ago

    right.

    Sandeep More

    4 weeks ago

    In my heydays, I learnt the hard way that when a Relationship Manager promises 25% pa returns, he is in fact telling us that he would be earning 25% at my expense. HDFC SAP from Standard Life Insurance Co was sold to me as a recurring deposit with free life insurance with minimum annual assured returns of 12% pa

    REPLY

    Ajay Kumar

    In Reply to Sandeep More 4 weeks ago

    Same case. Escalated this to the Managing Director Mr. Aditya. Contacted my lawyer who advised me against filing a Police complaint on mis-representation. Lated to my chagrin found out my lawyer was also representing HDFC in other cases!!

    Shirish Sadanand Shanbhag

    4 weeks ago

    Even when in the past HSBC is exposed, it has not improved its business ethics.

    REPLY

    Carlos De Souza

    In Reply to Shirish Sadanand Shanbhag 4 weeks ago

    Does a leopard change its spots ??

    Guru Kalle

    4 weeks ago

    This is a serious mistake by the bank.How did they allow that to happen ??

    REPLY

    Carlos De Souza

    In Reply to Guru Kalle 4 weeks ago

    This is NOT a mistake. They are CHEATS and have been so for decades, if not longer.

    Rajesh Kothari

    4 weeks ago

    Banker should NOT be your financial consultant. It’s a big mistake.

    Also second mistake is giving the PoA to do investment on your behalf. Never do it.

    Actually SEBI and RBI should ban banks from acting as investment advisors.

    MT

    4 weeks ago

    Happens when you listen to your banker , he is there to increase his bank balance , not yours

    Mohamed Meghani

    4 weeks ago

    This is due to the lax and irresponsible attitude of RBI the so called Watchdog of banks. Can you ever imagine such an attitude of Watchdog in any other nation

    REPLY

    GLN Prasad

    In Reply to Mohamed Meghani 4 weeks ago

    Let us be fair, and do not blame RBI for the frauds by Individuals in the Bank. The most shocking lesson is that even superior officials are hand in glove and always try to suppress facts and do not initiate any action to protect their employees. I am afraid that there should have been more such incidents that were not published as this case is not isolated. Exploiting senior citizen's faith in a bank is highly deplorable.

    PMC Bank Fraud: Management Seeks Undertaking from Staff that They Will Not Withdraw Deposits for 3 Years
    On the very day that the Reserve Bank of India (RBI) has to file an affidavit in response to a notice by the Bombay High Court, the management of fraud-hit Punjab and Maharashtra Cooperative Bank (PMC Bank) has sent emails to staff depositors seeking a declaration that they will not withdraw their personal deposits with the bank for a period of three years, even if restrictions on withdrawal are lifted by the regulator. 
     
    The email sent from the Bank's head office says, "...I/We undertake not to withdraw and to keep deposits with PMC Bank for 3 years even after the restrictions on the Bank are removed by Reserve Bank of India (RBI)." (See the image below)
     
     
    The PMC Bank has been put under restrictions by the RBI since September after an alleged Rs4,355 crore scam came to light, following which the deposit withdrawal was initially capped at Rs1,000, causing panic and distress among depositors. The withdrawal limit has been raised in a staggered manner to Rs50,000.
     
    Founded in 1984 by S Gurcharan Singh Kochhar, in a small room in Mumbai, the bank had now grown to a network of 137 branches in six states and ranked among the top 10 cooperative banks in the country.
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    COMMENTS

    gcmbinty

    4 weeks ago

    This demand of the PMC Bank is unjustified without any guarantee to the depositors that after three years the money would be returned as FD with market interest. The staff depositors or any other account holders must not sign on the dotted lines of the proposed
    declaration seeking a declaration that they will not withdraw their personal deposits with the bank for a period of three years. If the RBI is willing to stand a guarantee to the security of the deposits?

    City Cooperative Bank’s Decay under RBI’s Watch Holds Lessons for PMC Bank’s Revival
    Last week, I wrote about how the Reserve Bank of India’s (RBI’s) inspection reports, procured by Girish Mittal under the Right to Information (RTI) Act, had all but identified the fraud that led to PMC Bank’s (Punjab and Maharashtra Cooperative Bank) eventual failure way back in 2014-15; but RBI failed to dig deep or follow it up. Three years later, RBI froze depositors’ funds and eight persons succumbed to the shock and stress of their hard-earned savings likely to go up in smoke. 
     
    The story repeats itself with City Cooperative Bank (CCB), which is much smaller, with only 10 branches and Rs440 crore of deposits. CCB has been placed under RBI directions since 17 April 2018 for six months. Depositors were allowed to withdraw only Rs1,000 of their hard-earned deposits. This was a tightening of RBI’s regulatory action which was already in place in 2015-16.
     
    RBI has extended the restrictions three times, the latest on 17 October 2019. By then, PMC Bank had collapsed and, with CCB depositors also reviving their protests, RBI increased the amount they could withdraw from Rs1,000 to Rs5,000. 
     
    When RBI places a bank under directions, it suggests a possible revival. RBI’s statement accompanying the CCB action said, “The issue of directions should not per se be construed as cancellation of banking licence by the Reserve Bank of India. The bank will continue to undertake banking business with restrictions till its financial position improves.” The reality is diametrically different. In CCB’s case, RTI activist Girish Mittal’s application yielded inspection reports for three years: 2015-16, 2016-17 and 2017-18.  
     
    Even a cursory reading of the summary findings, as of 31 March 2016 (marked Secret), clearly show that the Bank “did not have adequate assets to meet its liabilities” and there were plenty of other irregularities as well. 
     
    RBI had also imposed a ‘Supervisory Action Framework’ (SAF) on 23 November 2016. But, instead of an improvement, things only deteriorated over the next three years. Interestingly, the number of depositors nearly halved, from over 96,000 to just over 50,000, indicating an exit of savvy persons.
     
    What explains RBI’s failure to take steps to revive the Bank in 2016? Was it that this tiny bank was headed by Anandrao V Adsul, a four-time member of parliament (MP) from Amravati, representing the Shiv Sena which was part of the then ruling alliance in Maharashtra? Several members of the Adsul family were also a part of the board of directors.
     
     
    Or, was it because RBI, completely blindsided by a much bigger scam at PMC Bank, actually believed that CCB would be taken over and no other action was required? When RBI put PMC Bank under strict restrictions, PMC Bank was in talks to acquire two loss-making banks in Goa --The Mapusa Urban Cooperative Bank and the Madgaum Urban Cooperative Bank. It had also submitted a proposal to RBI to acquire CCB. 
     
    This only establishes RBI’s poor supervision and inspection and complete lack of market intelligence. Let’s look at what the RBI inspection reports said.
     
    Inspection Report 2015-16: The report says that CCB’s assets would not cover liabilities. Its capital to risk-weighted assets ratio (CRAR) was -5.2% against the minimum stipulated level of 9%. The Bank’s net-worth was fully eroded. The report says that the realisable value of assets after provisions and depreciation, at Rs522.89 crore, was less than outside liabilities assessed at Rs547.70 crore. The real value of paid-up capital and reserves (-Rs15 crore) was inadequate to meet liabilities. 
     
    There were instances of fraud that were “neither reported by the Bank nor adequate provisioning was made thereon,” it says. RBI asked for 100% provisioning of these loans which only increased losses. Its credit appraisal was ‘not satisfactory’ and was not based on the ‘genuine need of the borrower’. The post-disbursement supervision was also ‘not satisfactory’. 
     
    The Bank’s board was not bothered about addressing all the issues and non-compliances noted by RBI. As in PMC Bank’s case, the audit system was found deficient, wasn’t adhering to KYC (know your customer) policy and had not even allotted unique customer identification code (UCIC) to all customers. 
     
    The Bank’s reported gross NPAs (non-performing assets or bad loans) were 11.83% and net NPAs were 8.84%. As against this, the gross and net NPAs, as assessed by RBI, were massively higher at 46.24% and 44.50%, respectively.
     
    Based on the financials, as assessed in the inspection report on 31 March 2015, RBI imposed SAF, which placed strict restrictions on the Bank’s operations, without any revival plan. 
     
    At this time, CCB had deposits of Rs534 crore, of which Rs409 crore were high-cost term deposits (over 76.7%), and only Rs124.45 crore were current and saving accounts (CASA). Bad loans jumped in 2015-16 from Rs42 crore to Rs167.65 crore (gross NPAs) and the Bank did not have adequate provision for loan losses. 
     
    Inspection Report 2016-17: The Bank continued to remain under SAF that year. Yet, it’s paid-up capital increased by Rs11 lakh to Rs10.62 crore due to ‘new members’. However, CRAR declined dramatically from -5.12% to -28.68% “mainly due to high level of divergence in the loan portfolio of the bank,” says the inspection report.
     
    The realisable value of assets, at Rs531 crore, was less than its outside liabilities assessed at Rs600 crore. Real value of paid-up capital deteriorated further. The report says, value of deposits as well as capital and reserves were fully eroded to the extent of 11.89%.
     
    In simple terms, this means that the Bank was already eating up customers’ deposits. And, yet, there was nothing from the RBI to warn ordinary persons who were depositing more money into the Bank.
     
    The inspection report says that total deposits increased from Rs534 crore to Rs586 crore; of these, term deposits had increased from Rs409 crore to Rs433 crore. The biggest jump of 22% was in CASA accounts which rose from Rs124 crore to Rs152 crore. 
     
    With RBI restrictions in place, the Bank’s loans and advances declined from Rs362 crore to Rs343 crore. Although the Bank was under RBI’s close watch, the insipid inspection report has no significant violations to report, except weaknesses in certain processes and absence of a policy on identifying bad loans, followed by a routine narration of the management structure and operations. The only negative observation is that the functioning of the audit committee, the loan and scrutiny committee and recovery committee needed improvement. The CEO (chief executive officer) of the Bank had resigned in July 2017 on health grounds; but RBI has no comment on management continuity or efficiency.
     
    Interestingly, CCB’s operating income jumped a massive 103% due to profit earned from trading in securities (trading profit alone was up 341%). This, along with lower operating expenses (staff, etc), still led to a declared a net loss of Rs20.03 crore. However, RBI assessed the net loss for 2016-17 at Rs94.82 crore.
     
    The report makes it clear that RBI imposed restrictions and hobbled operations with absolutely no turnaround plan. Meanwhile, innocent depositors were clueless that the Bank was sliding dangerously.
     
    Inspection Report 2017-18: As is obvious, CCB’s position had deteriorated further by 31 March 2018, even under the SAF. Accumulated losses led to a decline in capital and the assessed CRAR declined from -28.68% to -65.46% on 31 March 2018. The Bank’s own estimate was much lower.
     
    Finally, on 17 April 2018, RBI tightened restrictions by imposing more stringent ‘all inclusive directions’ on the Bank. This only confiscated depositors’ money and prevented them from withdrawing more than Rs1,000 from their accounts, with no revival plan. The inspection report notes that CCB’s real net-worth declined to -Rs120.19 crore, while the assessed net-worth fell 72%, to Rs50.48 crore.
     
    This report also indicates a big drop in bulk deposits and savings accounts. Deposits dropped a hefty 24.20% (see table). Although RBI had prohibited premature withdrawal of deposits, and CCB also did not accept fresh deposits, people were allowed to take away term deposits on maturity.  
     
     
    Since CCB was made to reduce interest to the level offered by State Bank of India (SBI), as part of RBI directions, this too could have led to the withdrawal by alert depositors. The rest of the inspection report is a wishy-washy narration of routine markers. What is clear is that CCB had been forced into a zombie state due to RBI’s directions; the Bank had no leeway to improve profitability. 
     
    None of the three reports has any comment on quality of management; nor do they indicate whether CCB’s downfall was due to political interference, behest lending or sheer incompetence. These insipid reports call into question the very purpose of RBI’s annual inspections, which seem to add no value, but, in fact, precipitate the downfall of the Bank once it goes into the red.
     
    All this holds important lessons for PMC Bank, where RBI is promising a turnaround, based on the sale of collateral security offered by the HDIL (Housing Development and Infrastructure Ltd) group against the massive Rs6,500 crore of fraudulent borrowings. With no independent assessment of the security, or the claims of other banks and creditors, the PMC Bank will remain in a zombie state, swallowing up depositors’ money. It is already a zombie on a path of slow decay with a running cost of Rs1crore a day! 
     
    We clearly need a different way of dealing with loss-making cooperative banks that are eating away people’s savings. 
     
    Here is the copy of RBI Inspection Report on The City Cooperative Bank as on 31 March 2016...
     
     
    Here is the copy of RBI Inspection Report on The city Cooperative Bank as on 31 March 2017...
     
     
    Here is the copy of RBI Inspection Report on The city Cooperative Bank as on 31 March 2018...
     

     

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    COMMENTS

    ANIL GOPAL SHINDE

    4 weeks ago

    It can be seen that the RBI has not lived up to its expectations. What exactly is the role of RBI?. Its role in the current banking system needs to be specified. If not RBI then who is suppose to take care of the hard earned money of the depositers. OR we can presume that in our country, we are making ful use of democracy, to loot the hard earned cash of normal public. The situation is extremely pathatic. I have lost all the respect I had for the RBI.
    Given the level of financial literacy in our country & current stand by RBI / GoI, we can safely presume that, there will not be any end to such frauds in banks

    manojkamrarti

    4 weeks ago

    All officials of DCBR, DCBS of RBI need to be examined over their corrupt silence over inspection reports of all urban cooperative banks busted/under directions.

    (1) DCBR duties to stop banking scam are --Administration/interpretation of Banking Regulation Act, 1949 (as applicable to cooperative societies);Formulation of policies for the regulation of Urban Co-operative Banks (UCBs)/State Cooperative Banks (StCBs)/Central Cooperative Banks (CCBs) on banking related matters;Regulatory action on co-operative banks under direction and cancellation of bank license;

    (2)DCBS duties to stop banking scam are-----
    a. Supervision of Primary (Urban) Co-operative Banks (UCBs)/Salary Earners’
    Co-operative Banks through onsite and offsite mechanism.
    i. Scrutiny of Inspection Reports of UCBs, follow-up with the UCBs for
    compliance, examination of the compliance, processing for further
    supervisory action like issue of Operational Instructions, supersession of
    Board of Directors, imposition of All Inclusive Directions on the co-operative
    banks, imposition of monetary penalty, etc. in case of major irregularities/
    violations by the UCBs;
    ii. Analysis of data received through offsite returns;
    DCBS undertakes on-site and off-site supervision through its Regional Offices;
    Also follows up for compliance to violations recorded in inspection reports;
    f. The findings of the inspection are placed before BFS/Sub-Committee of BFS/
    and at RO level to Local Board/TAFCUB;

    Alas , If these two deptts would have fulfulled their duties as per RBI manual, no such scam of much much bigger size would have been possible and most probably avoided.

    manojkamrarti

    4 weeks ago

    Actually, Banking Regulation Act-1949 have been systematically weakened for urban cooperative banks to give full freedom for bigger scams . But no expert committee of RBI ever highlighted this fact except K Madhav Rao committee (2011) . Recent R Gandhi report is entirely fake nowhere highlighting necessity of legislative amendments in the Act to make it at par with commercial bank by increasing supervisory role of RBI.

    (1) In 1965, numerous sections appliable to commercial banks omitted for cooperative banks. (so more than 40 percent supervision was ended in 1965)

    (2) In 1984, further amendment made numerous additions of sections further weaking banking regulation act by giving relaxation of submission of regular Monthly, quarterly, Annual returns. Urban cooperative banks were kept out of purview of supervision.

    (3) 2013, several other amendments were made by further weakening the Act .

    (4) SAF (supervisory action framework-2012) , CAMEL (2010), agreement with state govt (2005) these were illusory efforts by RBI to keep continuing further scams despite knowing well about inefficient role as compared to removal of undue relaxations in the BR Act-1949 for cooperative banks (specifically urban cooperative banks)

    Thus many more scams will continue unless and until legislative amendments in BR Act is made by withdrawing undue relaxations given to cooperative banks (specially to urban cooperative banks).--GOD BLESS RBI in view of remaining mum over corrupt weakening of BR Act by unduly suppressing it by creating entirely meaningless experts study reports after reports without citing the real issue.

    kd.paranjpe

    4 weeks ago

    I sometimes wonder if there is any role of the RBI relating to informing the customer( depositor). Normally, when any bank is stressed, the customer is the last to know. If the RBI cannot do it can the performance rating companies provide this service. These rating agencies inform only about the Company health when it comes to equity investors, why is it that bank depositors have no such Institution to warn them about the Banks under performing and likely to go under due to mismanagement or plain theft. Surely, the RBI can set up such an Institution for the benefit of the customers. IRDA does communicate, and so does SEBI about brokers.

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