PMC Bank: If RBI had bothered about “Fit & Proper” Check, How did it Ignore the Wadhwan and HDIL Connection
More evidence spills out about the deep involvement of the Wadhwan group in Punjab and Maharashtra Coop Bank (PMC Bank) which has been put under a strict freeze by the Reserve Bank of India (RBI) triggering panic and chaos among depositors since 23rd September. 
 
This raises further questions about the poor quality of RBI supervision and how it seems to be abdicating all responsibility on the claim that it shares regulatory responsibility with the Registrar of Cooperatives. 
 
Yesterday, Moneylife wrote about how RBI turned a blind eye to PMC Bank chairman S Waryam Singh’s close links to the HDIL (Housing Development and Infrastructure Ltd) realty group and was even listed as a promoter in their official disclosures. Remember, the Bank is understood to have lent Rs2,500 crore to HDIL, which its managing director (MD) claims is secure, but RBI’s action against the Bank indicates otherwise. 
 
HDIL’s annual report for 2015 shows that S Waryam Singh’s shareholding in HDIL is 1.91%, which is next only to the Wadhwan family holding.
 
According to a former shareholder and analyst, Waryam Singh’s held this stake in HDIL since 2007 and, at that time, it was worth around Rs1,000 crore at stock prices prevailing then.  
 
 
Mr Singh transferred his stake to his relatives in 2015-16, which means it probably remains within his family and explains the lending to HDIL that brought the Bank down. 
 
 
It is not clear how much of a stake the Wadhwan family held in PMC Bank.
 
However, their deep involvement and investment is clear from this tribute to Rajesh Kumar Wadhwan, published in PMC Bank’s annual report when he passed away in that year.
 
The Bank credits the late Mr Wadhwan with “turning around a foundering tiny institution which Punjab and Maharashtra Coop Bank then was.” Isn’t it ironical that the very same group is today responsible for the tears, anguish and losses of thousands of businessmen and small depositors? 
 
 
Was the RBI a mute spectator to all this on the plea that cooperative banks are under dual regulation? Did RBI inspectors ever go through the annual reports of the Bank as part of their inspection and note the influence of HDIL’s promoters on PMC Bank?  Did it monitor loans and facilities to the group? 
 
Waryam Singh was the chairman of PMC Bank even then and Mr Joy Thomas, who feigns ignorance about the extent of lending to the HDIL group (in television interviews) was the MD even in 2000-01. It is unclear how he has been allowed to continue and not sacked, even after the Bank has been put under draconian business constraints. 
 
Now, put this in the context of RBI’s litigation with Kotak Bank over the percentage of shareholding in the Bank. The matter is in court because RBI demanded a sharp reduction in the promoter shareholding of the Bank, without assigning any reasons for the demand. What is the point in demanding numerical compliance if the regulator fails to note or act on a more dubious nexus? 
 
Was PMC Bank's chairman, S Waryam Singh, being part of the HDIL promoter group not a matter of significance? Did he meet RBI’s ‘fit and proper’ criteria to be chairman of the board? 
 
Unless the regulator is brought under scrutiny and questioned for its failure to supervise, we will continue to have large-scale fraud in financial institutions. While RBI pleads dual regulation, the very fact that it could appoint an administrator and impose such strict restrictions on the Bank’s activities, shows that it had adequate powers to supervise the bank and prevent such a collapse. 
 
Unless regulators are held accountable, only individuals and small businesses will pay the price while those responsible for the failure will get away unquestioned. 
 
For the first time ever, the Serious Frauds Investigation Office (SFIO) questioned RBI for failure to supervise Infrastructure Leasing & Financial Services (IL&FS) adequately. RBI officials, directly responsible for PMC Bank, also need to be questioned. 
 

PMC Bank: Rs2,000 crore in Deposits of Hundreds of Co-operative Housing Societies Stuck; Accounts Inoperative

Comments
manojkamrarti
2 years ago
So poor record keeping , supervision by RBI that even annual report-trend and progress of banking in india- published is fake without disclosing unreported banks. Nor any penality imposed on defaulters. Even after enforcement deptt since 2017, very very few penalities have been imposed on defaulter banks not submitting returns.
NK Padhi
2 years ago
Almost all Co-op banks operate in no-man's land with RBI , the Registrar of co-operatives and the Statutory Auditors appointed by the banks closing their eyes to the ever-greening of NPAs. No rule prevails. Even Labour laws are flouted blatantly. Let the books of the co-operative be audited by PSB officers. Fifty per cent of co-op banks shall be forced to close down.
Ranbir Lamba
2 years ago
https://www.moneylife.in//article/pmc-bank-if-rbi-had-bothered-about-fit-and-proper-check-how-did-it-ignore-the-wadhwan-and-hdil-connection/58268.html


Read my post on PMC & dereliction of duties by bankers & RBI

Now they are digging on my recommendations & will amend rules to fix regulators
+ make them accountable in future

A)Was the RBI a mute spectator to all this on the plea that cooperative banks are under dual regulation? Did RBI inspectors ever go through the annual reports of the Bank as part of their inspection and note the influence of HDIL’s promoters on PMC Bank? Did it monitor loans and facilities to the group?
B)Unless the regulator is brought under scrutiny and questioned for its failure to supervise, we will continue to have large-scale fraud in financial institutions. While RBI pleads dual regulation, the very fact that it could appoint an administrator and impose such strict restrictions on the Bank’s activities, shows that it had adequate powers to supervise the bank and prevent such a collapse
C)RBI officials, directly responsible for PMC Bank, also need to be questioned.
Vaibhav Dhoka
2 years ago
Since long I am telling that in India most of the irregularities happen as regulators turn their eye and scams flourish as they have no responsibility and in return get their due from scamsters.Final loosers are COMMON MAN.
TIHARwale
2 years ago
RBI is filled up with wasterals. it is not unusual see RBI inspectors on branch inspections start the day one hour after branch opens and to not be called as late comers leave the branch one hour prior to branch closing time and shamelessly expect branch to host them lunch at different restaurants provide dry fruits for munching along with fruit juice and during stock inspectionexpects gifts from the bank borrowers
P S Krishnan
2 years ago
Please file a PIL to stop Joy Thomas, Bank Chairman / Management from fleeing the country. Their passports should be seized and they should be placed under house arrest and all their assets should be reviewed by Income Tax to check income / asset variations
Hemlata Mohan
2 years ago
Another piece of information is that RBIOfficers Credit Society has crores of FD with this Bank
Shirish Sadanand Shanbhag
2 years ago
RBI should clear withdrawal of following types of accounts maintained by PMC bank.

(1) All savings bank salary accounts, Monthly income or periodic. account fixed deposits
maintained with PMC, Institutional Savings or current bank accounts, Small business
current or savings bank account, all with their full balance withdrawal facility.

(2) Fixed deposits of Individuals, and Institutions, to get them premature or postmature
withdrawal.

Central and state governments should intervene in this matter, and give relief to the affected deposit holders.
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