Having run out of options and with their pleas to the government, regulators and courts being ignored, depositors of the crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank are now planning to fast for their rights.
So far, the government has remained indifferent to every plea including possible solutions offered by depositors as well as non-governmental organisations. At the same time, the Bank, which is burning Rs1 crore a day to keep its 120 branches running, while it is not allowed to conduct banking operations, is facing new demands from the tax authorities.
According to reports, PMC Bank has been asked to deduct tax at source (TDS) on the notional interest paid on deposits, even while those who have their hard-earned savings in the bank are not allowed to withdraw more than Rs50,000 each (an another Rs50,000 for specified emergencies).
A depositor, who is close to all developments, says, he spoke with officials from the Reserve Bank of India (RBI), who told him the report on revival of PMC Bank is with the finance ministry. "Government is not interested," he says.
Earlier in November, while speaking with reporters, finance minister Nirmala Sitharaman had said, "We have had a discussion with RBI and other agencies on if any of the confiscated properties of the promoters (PMC Bank) can be brought under RBI and pay back to the customers of PMC Bank."
Moneylife and Moneylife Foundation have tried to help PMC Bank depositors.
Moneylife Foundation trustees also met Shaktikanta Das, the RBI governor seeking a solution in the PMC Bank crisis. We even connected with Hardeep Singh Puri, the minister of state for civil aviation (independent charge).
Meanwhile, according to a report from Business Standard,
the income tax (I-T) department has asked PMC Bank to deduct tax at source on interest paid on deposits, and submit it in the March quarter. In the December quarter, the Bank paid Rs7 crore as TDS from its coffers, and is now left with only Rs200 crore, it added.
Quoting a source, the newspaper says, "The bank has no money left to pay interest but it is crediting notional interest to deposit holders’ accounts to maintain peace. But the tax department’s instruction has shocked the Bank’ officials. In September last year, the Bank had sought exemption in payment/ deduction of tax on interest on deposits. The Mumbai TDS department rejected this request in January this year. In December last year, functionaries of the TDS department visited the bank to verify whether the TDS dues had been paid."
Sunil Sane, a depositor of PMC Bank says, when the RBI has restricted financial transactions, how can depositors earn any interest?
Some depositors of PMC Bank have threatened to go on indefinite fast on 2 March 2020 if they do not get their money back, says a report from The Hindu
. On Tuesday, a six-member delegation representing the depositors met Nationalist Congress Party leader Supriya Sule to request her to raise the issue with the Central government, the report added.
Anita Lohiya, a depositor who was part of the delegation, told the newspaper that they had asked Ms Sule, the MP, to arrange a meeting with prime minister Narendra Modi and RBI governor, Shashikanta Das.
“She has said she would try to arrange a meeting with both of them. Since the restrictions on the bank are about to end next month, we requested her to recommend that the restrictions not be extended. If the authorities don’t give clear signs, we have no option but to go on a fast unto death,” the report says quoting Ms Lohiya.
According to the report, a group of depositors also visited PMC Bank's head office in Bhandup to meet Jay Bhagwan Boria, the RBI-appointed administrator, but said Mr Boria did not provide a satisfactory reply to their queries.
Earlier this month, the Supreme Court had stayed the Bombay High Court order on the sale of the bankrupt Housing Development and Infrastructure Ltd (HDIL) as a measure to facilitate the repayment of dues of crisis-hit PMC Bank.
The RBI had moved the top court in an appeal challenging the Bombay High Court order.
According to the RBI, the PMC Bank manipulated its core banking system to shield nearly 44 problematic loan accounts, which includes HDIL. Limited staff members had access to these accounts. Enforcement Directorate (ED) and the Economic Offences Wing of the Mumbai police have registered offences against HDIL promoters and senior Bank officials.
The Bombay High Court had constituted a three-member committee for evaluating and then formalise sale of encumbered assets of HDIL. The High Court, through this channel, was expected to expeditiously recover dues, which were payable by the firm to PMC Bank.
In September 2019, the RBI discovered the PMC Bank had allegedly created fictitious accounts to mask loans to the tune of Rs4,355 crore approved for HDIL.
A PIL was filed in the High Court urging the court to pass directions for expeditious disposal of HDIL assets and properties, which were attached by various investigating agencies. The PIL contended the disposal of these assets would help in repaying PMC Bank depositors at the earliest.