The Dangerous ‘Bail-In’ Proposal by PMC Bank’s Rich Depositors
On Friday, 11th October, Mumbai Mirror, a local tabloid, published an exclusive report claiming that 200-odd ‘big depositors’ of the failed Punjab and Maharashtra Cooperative Bank (PMC Bank), which had stringent regulatory restrictions imposed on it, have come forward with a bizarre proposal. They have promised to maintain an untouched deposit of Rs5 crore each, if the Bank was allowed to resume operations and start to function normally. 
 
The paper projected this as a brilliant new effort to 'save' the bank and said that it has the support of the administrator appointed by the Reserve Bank of India (RBI). The decision was apparently taken at a meeting of 30 big depositors at the Dadar Gurdwara.
 
It is important to understand and analyse the implications of such a weird proposal. In a nutshell, large depositors are coming forward to help salvage/revive the Bank. On hearing just the basics of it,  MG Bhide, former chairman of Bank of India (RBI) and former board member of the Deposit Insurance and Credit Guarantee Corporation of India (DICGC) spontaneously exclaimed - this is a ‘bail in’.  
 
Effectively, the depositors are offering to ‘bail in’ the bank, while smaller depositors get back their money. 
 
This “bail in” is slightly different and with dubious portends for Indian bank depositors in general. ‘Bail-in’ of banks by their depositors is a highly controversial and contentious proposal which the government of India has been trying to push, in line with an international commitment at the G-20 summit.  
 
A bail-in, as opposed to a ‘bailout’ by the government, involves converting depositors’ funds into equity, so that the bank shores up its capital and continue operations. If the bank survives and is able to turn around, the rise in equity prices may allow the depositors to profit.
 
In PMC Bank, this proposal to retain deposits will only yield Rs1,000 crore. It is not clear how that would be enough to revive the Bank, when the capital is eroded, the dubious loan extended to the HDIL group is anywhere between  Rs4,500 crore to Rs6,500 crore and it is unclear what extent of the other loans are recoverable. 
 
In fact, such dangerous kite flying, which reportedly has the approval of the RBI-appointed administrator, holds out false hope to depositors, while the banking regulator itself has remained resolutely silent since 23rd September. 
 
On that day, its draconian order to limit withdrawals to Rs1,000 triggered blind panic among depositors. RBI has since increased the limit twice while offering no indicator whether the decisions were driven by political pressure at election time or based on its financial assessment of the banks loans and assets. 
 
The bigger worry here that the finance ministry, will use the PMC Bank example as an example of how depositors should be “willing to make sacrifices” to save their banks. 
 
Remember, the finance ministry is working at re-introducing the controversial FRDI Bill (Financial Resolution and Deposit Insurance bill). It was withdrawn in August 2018 from the Lok Sabha, a year after it was introduced, when it created panic among depositors of nationalised banks.  
 
In the past two weeks, there are reports that a modified version of the bill is going to be introduced in the forthcoming session of parliament. It may increase deposit insurance. Re-introduction of the disastrous ‘bail-in’ idea even will derive greater force, if depositors of PMC Bank provide proof that they are willing to make such sacrifices. 
 
This, of course, has a terrible side-effect. It let’s off corrupt bank managements who sink their banks, and the regulator for failing to supervise. 
 
In case of PMC, RBI has failed to regulate, inspect and detect conflict of interest in how the shady HDIL group and other large industrialists have bailed out the bank from time to time. 
 
In fact, the more one digs, it emerges that PMC Bank, while showing a good profit, has been running a fairly precarious operation that has needed repeated bailouts.
 
Now let us look at this in the context of various pieces of information available. PMC Bank may have been a well-run, cooperative bank but the RBI, by claiming helplessness about dual regulation, has kept alive several banks whose networth has been fully eroded, says Mr Bhide, who was on DICGS’s board. 
 
This means depositors’ money is being used to pay salaries, he says, while the burden is being deliberately passed on to DICGC. 
 
Now consider the fact that India had 1,551 cooperative banks in 2018-19 and Maharshtra alone has over 72 such, which the finance minister claims is not its responsibility. 
 
But their assets have increased from Rs1.3 lakh crore to Rs5.6 lakh crore in the same period. In Maharashtra alone, 130 urban cooperative banks were merged into 72 entities.
 
At the other end of the spectrum, the super safe and large State Bank of India has admitted in response to a Right to Information (RTI) filing that it has written off a colossal Rs76,000 crore in bad loans of only 220 defaulters  who owed it over Rs100 crore each. 
 
We also know that banks are ruthless in recovering money when it comes to small borrowers. How does this square with the sacrifice the PMC Bank depositors are offering to make? 
 
Does it mean that duious and corrupt bankers who lend recklessly to big industrialists will go scot free while while rich depositors will need to keep coming forward to ‘bail in’ banks?  
 
If this is the future, there will be an uproar and a loss of confidence in the banking system. 
 
Hopefully, the rich depositors of PMC Bank, who are willing to make a sacrifice for the banks’ revival and RBI, will consider the larger consequences of rushing into an action without understanding and analysing the implication for the banking system. 
 
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    COMMENTS

    suneel kumar gupta

    2 days ago

    Every one is blaming RBI because of being regulator. I have noted that in all financial frauds, auditors are always hand in glove with the fraudsters. If CA's licences are cancelled for ever, they will also think before involvements in such cases.

    REPLY

    Ranbir Lamba

    In Reply to suneel kumar gupta 2 days ago

    Auditors & Regulator are both responsible. Greater responsibility lies on Regulator.
    Punish regulator & then see effects.
    Regulator should recommend to cancel auditors license + Arrest of bankers & management.

    Ashok

    3 days ago

    Ms. Suchita Pl reply or give your cel.It is a public fraud. And people who have before fraud coming into public domain
    are cheaters hand in glove with the Thomas. First of all criminal petition/fir with
    an advice of advocate should be filed. Secondly one thing Thomas deliberately/unknowingly committed that he has been doing it since last couple of years.
    A criminal negligence writ/fir can be filed against Regulator/Auditor. Yesterday I have asked the lawyer who spoke yesterday, said it will not bring us money. Madame every person concerned will take efforts at highest level to resolve this issue. Here we
    required to take all three action at one time. Discuss with advocate. my cel.9820181135.
    As regards Sikh community proposal that of course be available to us, If you find it workable ok or otherwise reject, 200 account holder' application will not stand anywhere.
    Whose crores of Rs. are in fixed deposit they know they are also going to get Rs.1 lac(period is indefinite ). So it favours them for the bank to survive. other small depositors as somewhere it is mentioned that RBI is going to allow 1 lac twice a year.
    Our strategy should have multileg. but you people are more knowledgeable. But my
    Points should be considered.

    MOHAMMED ASLAM ANSARI

    3 days ago

    Careless regulatory authorities (may be even corrupt) are working for super rich at the cost of poor depositors. And the Finance ministry too refuses to accept the responsibility. Who is answerable? Shall we keep our money at home?

    REPLY

    PRADEEP KUMAR M S

    In Reply to MOHAMMED ASLAM ANSARI 3 days ago

    Bought regulators, bought at the highest levels.

    Gurmeetsingh Mehtab

    3 days ago

    Is Sucheta Dalal searching or another Harshad Mehta moment ? Wy cannot she appreciate the fact that democratically elected Gurudrwara committees have united to understand the well being of the small depositors of the bank ? She seems to have forgotten that Sikhs were major depositors in the bank and have felt most cheated themselves.

    When other banks in the past have embezzeled depositers, did people of their communities come together to save the bank ? So, while the guilty need to be punished, its unfair to suspect the intention of the Gurudwara committees and the Sikh community at large.

    Mukund Puranik

    4 days ago

    I fully agree with Sucheta ji. These rich depositors are just trying to protect their people from public humiliation and jail to these directors. However there is no guarantee how these charity kings will recover their help and at what cost? It is just an attempt to put the whole issue under carpet and avoid legal procedures (civil and criminal). There should be no such short cut allowed and such bad practice should be stopped before it is started.

    REPLY

    Gurmeetsingh Mehtab

    In Reply to Mukund Puranik 3 days ago

    Most Sikhs families and Gurudrwara committees have bank accounts with PMC Bank with substantial deposits. Hence they are most affected by the crimes committed by the board and top management of the bank. The fact that Waryam Singh has been excommunicated from the Sikh community itself indicates a stand of non-tolerance towards his acts.

    Surely, mistakes have taken place, and surely there has been malafide intent by vested parties, and they should be harshly punished by law.




    Ashok

    4 days ago

    Ms. Suchita Pl reply or give your cel.It is a public fraud. And people who have before fraud coming into public domain
    are cheaters hand in glove with the Thomas. First of all criminal petition/fir with
    an advice of advocate should be filed. Secondly one thing Thomas deliberately/unknowingly committed that he has been doing it since last couple of years.
    A criminal negligence writ/fir can be filed against Regulator/Auditor. Yesterday I have asked the lawyer who spoke yesterday, said it will not bring us money. Madame every person concerned will take efforts at highest level to resolve this issue. Here we
    required to take all three action at one time. Discuss with advocate. my cel.9820181135.
    As regards Sikh community proposal that of course be available to us, If you find it workable ok or otherwise reject, 200 account holder' application will not stand anywhere.
    Whose crores of Rs. are in fixed deposit they know they are also going to get Rs.1 lac(period is indefinite ). So it favours them for the bank to survive. other small depositors as somewhere it is mentioned that RBI is going to allow 1 lac twice a year.
    Our strategy should have multileg. but you people are more knowledgeable. But my
    Points should be considered.

    Ranbir Lamba

    4 days ago

    Nothing will happen
    Till PIL is lodged
    & FIR against Bank + board of directors+ auditor+Regulator+ GOI

    Cheating+ forgeries + Dereliction of duties+ breaking of trust + theft extra

    ndsubramanian

    4 days ago

    It is for the authorities to act. Be careful about An FIR filing against you for revealing more about RBI

    ndsubramanian

    4 days ago

    great work

    Dr.Dhananjaya Bhupathi

    4 days ago

    https://www.moneylife.in/article/the-dangerous-bail-in-proposal-by-pmc-banks-rich-depositors/58386.html
    1. Indian Banking system [PSBs, Co-op & Private Banks, etc.,] ensured Scams losing INR.Trillions [1 trillion=1 lac crores] in Independent India. It was congress legacy.
    2. The cause attributes to laxity on RBI/IBA/Central & State-Statutory Audits.
    3. Most of the scams take place at apex levels involving ruling politicians, respective Bank board[s], CMDs, CEOs, EDs, etc.
    4. A silver lining in this sorry state of affairs & ironical reality. A majority of staff [Clerk-Scale VII-GMs] are honest to the core, hard-working & the competent management.
    5. Shri Narendra Modi is the Karma yogi*. He got elected first-time as an MLA to become CM & as the first time an MP to become the PM. He possesses a revolutionary mindset. Modi Regime 2.0 is active to strive for the deportation of fugitives with a positive response from Swiss authorities with a list of Indians with unaccounted looted money. The functioning of NIA, ED, CBI, & IT, etc., is noteworthy.
    6. RBI’s hat-trick to lower interest rates on deposits vis-à-vis advances is outdated & ineffective.
    7. The PM & his cabinet colleagues + BJP/RSS cadres must sit together and find out the ways & means of reviving the drifted Indian economy. No quick-fix remedies work. If not, the UFM may discuss with DR.Manmohan Singh.
    8. https://www.youtube.com/watch?v=T7fOf8rUrdw.
    9. SATYAMAEVA JAYATHE!!!

    Faheem Mitha

    4 days ago

    Ms. Dalal,

    The Mumbai Mirror article says the following:

    Close to 200 big depositors – each with a deposit of Rs 5 crore or more – have offered to not touch their money for three years if PMC is allowed by the Reserve Bank of India to resume operations.

    You wrote:

    They have promised to maintain an untouched deposit of Rs5 crore each, if the Bank was allowed to resume operations and start to function normally.

    Clearly, that's not the same thing. The *minimum* value of each deposit, not its actual value, would be Rs. 5 crores. So we are talking about a lower bound here. In addition, it's possible that other members of the Sikh community would stay if their leaders asked them to. They are a close-knit and organized community, and they appear to identify with this bank. It's also possible that much of the bank deposits by value are owned by Sikhs, but this is speculation.

    But we really need to hear from the Sikh community directly as to what their plans are. And if course, the RBI needs to tell us what is going on with the bank.

    REPLY

    Sucheta Dalal

    In Reply to Faheem Mitha 4 days ago

    All the best to you if you think there will be more. Also, please find out -- we know but have no confirmation -- as to who withdrew Rs3363 crore of 29% of the total deposits in 3 days before the RBI action. It is important to know the truth and affected depositors need to put pressure on RBI and politicians to put information out in the public domain. Their silence after 19 days ought to worry you. It is the regulator you need to question -- whatever anybody else's intention, only RBI can grant permission for revival or closure.

    Ashok

    4 days ago

    FOR THE PERSONAL ATTENTION OF MS. SUCHETA DALAL
    It is a public fraud. And people who have before fraud coming into public domain
    are cheaters hand in glove with the Thomas. First of all criminal petition/fir with
    an advice of advocate should be filed. Secondly one thing Thomas deliberately/unknowingly committed that he has been doing it since last couple of years.
    A criminal negligence writ/fir can be filed against Regulator/Auditor. Yesterday I have asked the lawyer who spoke yesterday, said it will not bring us money. Madame every person concerned will take efforts at highest level to resolve this issue. Here we
    required to take all three action at one time. Discuss with advocate. my cel.9820181135.
    As regards Sikh community proposal that of course be available to us, If you find it workable ok or otherwise reject, 200 account holder' application will not stand anywhere.
    Whose crores of Rs. are in fixed deposit they know they are also going to get Rs.1 lac(period is indefinite ). So it favours them for the bank to survive. other small depositors as somewhere it is mentioned that RBI is going to allow 1 lac twice a year.
    Our strategy should have multileg. but you people are more knowledgeable. But my
    Points should be considered.

    Cheruthon Ninan

    4 days ago

    I wish as depositors we can take separate insurance policy for our deposits. Even if I need pay a small premium at least these kind of issues are covered. Is this possible? Just like burglary etc.

    REPLY

    Ranbir Lamba

    In Reply to Cheruthon Ninan 4 days ago

    There is provision to insure lockers & jewelry on similar lines
    It will not be difficult to insure cash

    Ranbir Lamba

    4 days ago

    Special investigation team should investigate the insiders who withdrew a phenomenal Rs 3300+ crores in 3 days advance

    Sucheta Dalal

    4 days ago

    Some of you posting comments about the wonderful offer by Sikh Gurudwaras ought to do some homework about who was given inside information and allowed to withdraw 29% of the deposits in 3 days before the bank collapsed -- a phenomenal Rs 3300+ crores. Think about it... can you withdraw even a crore on a single day without advance notice?? Find out who are the most powerful people controlling this bank. And you are happy with a fairy tale solution of Rs5 crore each which will not save the bank but only POSTPONE the problem until elections are over???? The banks survival needs a sensible solution. Read this: https://www.moneylife.in/article/if-pmc-bank-depositors-need-a-solution-they-have-to-get-engaged-in-large-numbers-in-a-legal-process/58393.html

    Why There Is No Financial System to Protect Common Man's Savings, Asks Deepak Parekh
    While we have regular loan waivers and corporate loan write-offs, why is no there financial system to protect the common man's savings, asks Deepak Parekh, chairman of Housing Development Finance Corp (HDFC). 
     
    "To my mind, there is no greater cardinal sin in finance than the misuse of the common man's hard earned savings. It seems brutally unfair that we have allowed a system of loan waivers and write offs every now and again, but yet we do not have robust enough financial systems to protect the honest, common man's savings. And mind you, this is not just a problem in India, this is a financial problem the world over," Mr Parekh said while delivering his keynote address on "Path to $5 trillion: Role of the Financial Sector" at the Centre for Financial Services. 
     
    Without taking the name of scam-hit Punjab & Maharashtra Cooperative Bank (PMC Bank), Mr Parekh said, trust and confidence are the backbone of any financial system and it takes years to build a reputation and seconds to destroy it.  
     
    According to the HDFC chairman, India needs more savers in the country if credit has to grow. "The savings rate at 30% of gross domestic product (GDP) has been showing a declining trend over the past decade. Household savings is important for the Indian economy and that is why there is likely to be a threshold beyond which lowering interest rates becomes difficult. Indian savers prefer assured returns which is why fixed deposits continue to remain the preferred choice of savings," he said.
     
    Investment and insurance play an important role in the financial life, especially for youngsters, Mr Parekh said, adding, "We have got to get younger people insured much earlier in life. We have got to get more youngsters to become patient, long-term savers and investors in equities and mutual funds. And I am optimistic enough to believe we are moving in the right direction. In 2014, assets under management of mutual funds hit the Rs10 trillion mark and in just three years, in 2017, it doubled to Rs20 trillion and as at August 2019 it stood at Rs25 trillion. About 57% of industry investor base are retail investors."
     
    In unusual times, as we are in right now, the HDFC chairman feels that fiscal and monetary policy tools need to be accelerated in a timely, yet prudent manner. He said, "There is consensus that a slight increase in the fiscal deficit target can be accommodated as long as it stimulates growth. Efforts are being made to ensure that lower fiscal revenues on account of stimulus measures, lower corporate tax rates and goods and services tax (GST) collection shortfalls could be compensated by more aggressive disinvestments plans and perhaps increased payouts by the Reserve Bank of India (RBI)."
     
    To ensure adequate liquidity in the system during this year alone, the RBI has reduced policy rates by 135 basis points (bps) and is trying for effective monetary policy transmission.  
     
    However, the crux of the problem with the financial sector, according to Mr Parekh, is that the flow of credit to the commercial sector is still clogged. "During the first six months of the current financial year, the total flow of resources to the commercial sector from banks and non-bank sources was only Rs0.9 trillion compared to Rs7.4 trillion in the previous year - that's a drop of 88%. This clearly reflects the risk averseness in the system." 
     
    "Since the time the asset quality review (AQR) began in 2015, banks have scaled back lending. Till last year, the commercial sector relied heavily on non-bank funding sources as a substitute. When non-bank funding sources got choked, it threw the financial system into a tizzy. The underlying point is that the Indian economy needs both, banks and non-bank sources to meet its funding needs. And the key hurdle now is getting over the trust deficit," he added. 
     
    According to Mr Parekh, several companies are still unwinding their overleveraged positions. He says, "Leverage is a double-edged sword. In good times, it helps to scale up and amplifies profits, but in a downturn, over leverage has seen the downfall of many. A simple rule is that capital must always be raised from a position of strength and not when one's back is up against the wall."
     
    Talking about India becoming a $5 trillion economy by 2014, the HDFC chief feels the question is not whether we can do it, but how soon we can attain this goal. He said, "Today, India is a US$ 2.8 trillion economy. It took India 60 years post-independence to become a $1 trillion dollar economy in 2007. It took another seven years to become a $2 trillion dollar economy in 2015. The next trillion will be added in just five years, when India is likely to be a $3 trillion economy in 2020. The key point is that each trillion is being added in a shorter time span. If India's economy is not $5 trillion by 2024 as envisaged by the government, it will certainly achieve it a year later."
     
    Mr Parekh feels that India critically needs two things from the world, capital and oil. He says, about 30% of bonds issued by governments and companies globally are trading at negative yields, which is about 17 trillion. "Doesn't this make it a fine time for India to seize the opportunity to attract much more global capital? Investors are craving for higher yields and India has demonstrated that it can deliver attractive returns. For example, despite all the negative headlines that the real estate sector has been receiving, few recognise that in the first six months of this year, investors have pumped in close to $4 billion across commercial office premises, retail and warehousing. Sovereign funds, pension funds, private equity investors are seeing the long-term growth opportunities in the expansion of India's services sector, particularly information technology (IT) and IT enabled services and e-commerce, which in turn needs warehousing and logistics assets," he added.
     
    The other key reason, according to the HDFC chairman on why India's macro parameters are currently fairly strong is that oil prices have remained fairly moderate. Fortunately, he said, "We have not faced shocks of oil above $100 per barrel since 2014. Since India imports 80% of its crude requirements, higher oil prices play havoc with inflation, the fiscal, the current account deficit (CAD) and the currency."
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    COMMENTS

    Sanjeev B

    3 days ago

    Liquidating FDs should be as simple as withdrawing money from an ATM. Why can't we have a system that allows a depositor to withdraw their FDs upto say 20 lakh from any bank they wish? That bank will need to just net it off using an FD clearing house system. And the clearing house will guarantee payment by insuring deposits through large insurance companies in India and abroad.

    This can be done, it is just that banking as an industry is living in the 20th century. Not just in India, but everywhere in the world. Retail depositors are the poor sods who get the worst treatment.

    Savings rates will grow if there is trust in the banking system. Right now that is sorely lacking.

    RAMACHANDRAN THARKABHUSHANAM

    4 days ago

    WHY SUCH LATE REALIZATION MR. PAREKH. IT IS NORMAL PHENOMENON THAT COMMON WAS ALWAYS HARD HIT. TAKE THE INSTANCE OF REDUCTION OF CORPORATE TAX WHICH BENEFITS BUSINESS PEOPLE AND INDUSTRIALISTS. FOR US THERE IS REDUCTION OF INTEREST RATE AND NO GREAT RELIEF FROM INCOME TAX. THAT IS THE WORLD.

    Ranbir Lamba

    5 days ago

    Nothing will change till law is changed
    That too harsh one

    Loose a penny
    Loose a limb of your body

    Gupta

    5 days ago

    Instead of going gaga (not RaGa) over an insane lawyer or Swamy from Harvard who is time and again projected as finance minister, a radical change would be to bring in someone like Deepak Parekh as a Finance Minister and now that Aditya Puri is retiring, put him as RBI governor. BUT only if you can let them be and allow them to function, which is where this govt has a problem. No use getting smart people in if they suffer the same fate as Mr. Raghuram Rajan (or RaRa!)

    B. Yerram Raju

    5 days ago

    Very good articulation on thinking way forward from the current imbroglio, The cause should be addressed because of the consequence. The cause Deepak Parekh should know is the way banks migrated to doing non-banking more than banking in their greed for profits. System-wedded banks forgot that there is a customer-depositor in front of them; there is a responsibility to him (him means her also); they have a responsibility towards due diligence for every borrowing client or a client who seeks other services. Yes; systems and digitization are necessary for speed and accuracy and this does not mean that the core of service behind it should be thrown to vagaries of managers. One Assistant General Manager of a PSB told me that after lending it is not her responsibility to monitor the loan so much as recovering the loan from whatever securities are available. This attitude has permeated so much in banking that should explain the unending burgeoning of NPAs across segments.
    In several cases for revival that we have handled, it came out clearly that banks were to blame more than entrepreneurs: term loans sanctioned without releasing working capital; working capital where sanctioned was debited with quarterly interest instead of capitalizing as project finance rules specify to the account leading to the account becoming NPA up front when the project was commissioned; working capital sanctioned but not released in time; work orders received were not extended finance on the ground that the limits were not renewed; yearly renewals did not take place despite submission of all the financial statements for want of the required staff; systems dictating the limits and not the enterprise activity etc. Since the Banks have to share the blame if the accounts were to revive, they do not revive the accounts and act like a Shylock. The regulator who should oversee the implementation of regulation is a mute spectator and a victim of the lobbying IBA. People refuse to see the red-herring and continue to live as hypocrites. Pleasing the boss and regulator with figures of performance somehow has attained credibility. This should change.

    gcmbinty

    6 days ago

    It is not the system, it is the man who manages the system bent to break for personal interests that requires some sort of fears of punishment in his or her mind. Take the example of the ICICI Bank Chairperson who with a view to help her own husband was lax in implementing the regulatory measures. If the traffic Police does not stop the traffic violations, the traffic signals system would be of any help. Similarly, if the manager of a bank does not follow strictly the rules of giving out loans, no system is good. The punishment has got to be exemplary.

    Deepak Narain

    6 days ago

    Mr Parekh is a great honourable man. But, we have problem with his own HDFC Bank. We have written about 10 times in recent past to all concerned, including its CEO, but to no avail.

    First, they arbitrarily blocked our online access to our Account (No. 12021570000696) without notice and now they are not restoring it. We have forgotten the PIN for our Debit Card and no relief about this either. We cannot create online a new Password for our Account without an active Debit Card and we cannot activate our Debit Card without access to our Account. It is a deadlock situation and no help.

    We are stranded in Canada due to sudden disclosure of serious heart and kidney problems with me (78+) and our own people in our country are further making life difficult for us! What to do?

    Nagaraju Bommanahalli

    6 days ago

    In India nobody knows how Indian companies are doing fraud from the beginning to last ,for example a big business men will start the company in India as below .His companies actual value is Rs2000crores but with the help of the auditors,Banks,and chartered accountants he made his company s values to RS 6000 crores by book adjustment with bribe and he call IPO that is in share market and collect Rs10000 crores in share market, first he pumped 60%of money to foreign country in the name of business and will deposit most of the money in his name next he will file bankruptcy due to losses and will write off all the loans this is the business doing in India ED is doing drama ICICI Bank chandakochar is well known to all she done huge fraud in ICICI Bank, this drama of enquire is doing from past one year, but still she is not arrested, reasons In this icici bank scam all SEBI auditors ED RBI central government rating agencies big leaders of all parties involved.central government making all efforts to avoid arrest these fellows,if arrested all all foreign country become knows most of the Indian companies running on bogus and take away all foreign investment,then India become bankruptcy.This is well known by central government hence avoiding all efforts to arrest directors of icici bank chandakochar DHFL jetairways Videocon kingfisher airline PNB bank head [email protected] etc .even Vijaymalya kingfisher airline companies don't have single plane in his companies name but all banks gave Rs10000 crores money, same type loans gave to jet airways,DLF, wait in few months most of the common people investment in icici bank NBFC PSU banks equity NCD mutul funds become Zero

    Rohan DSouza

    6 days ago

    RBI is the licensor and watchdog for all Indian banks. It is the RBI which has failed in its duties to detect frauds and undisclosed NPAs of banks . RBI should take the responsibility and use its reserves to guarantee the investments of the citizens in all banks, be it cooperative or private or govt owned. If it falls short of funds, it should take back its reserves which it has transferred to the Govt. How can you expect the common man to check the health of banks before investing when even the RBI could not do it. Its time for Govt and its institutions to take responsibility and accountability.

    REPLY

    Ranbir Lamba

    In Reply to Rohan DSouza 6 days ago

    Case in court can resolve it .PIL

    TIHARwale

    6 days ago

    a common saying in India is fools let out properties on rent to regret for the wise to enjoy and Government is in agreement with this and so replace depositors and borrowers respectively in Indian banking scenario

    Ranbir Lamba

    6 days ago

    Government has created tax terror even Rafael engineer fears tax terror.
    There is need to increase stringent punishments for NPA & loan default . Regulator & bankers + Babus be put under loss recovery terror
    Save each penny of investors They are your AAN DATTA.
    Pay money in hands of investors by
    A) Reduce prices & pass on benefits of 40% corporate tax rate
    B) Reduce GST
    C) Reduce IT slabs let max be 20%
    D) Rewards to employees for making loss making to profit making PSU
    E) Make each one accountable & responsible from peon to Netas .
    No immunity to anyone
    F( Perform or Perish

    ..

    To my mind, there is no greater cardinal sin in finance than the misuse of the common man's hard earned savings. It seems brutally unfair that we have allowed a system of loan waivers and write offs every now and again, but yet we do not have robust enough financial systems to protect the honest, common man's savings.

    PMC Bank: Finance Minister says Govt Will Amend Laws If it Help in Better Regulation
    Facing flak from several quarters on the Punjab & Maharashtra Co-operative (PMC) Bank fraud case, finance minister Nirmala Sitharaman on Thursday says if amendments help in better regulation, the union government would go ahead with the required legislative procedure in cooperative sector. While assuring customers and depositors, the finance minister also mentioned that her ministry has nothing much to do with the issues of PMC Bank but she will speak with Reserve Bank of India (RBI) governor on the distress of depositors. 
     
    "Finance Ministry may have nothing to do with it (PMC bank matter) directly because RBI is the regulator. But from my side, I have asked the secretaries of my ministry to work with ministries of rural development and urban development to study in detail as to what is happening (with PMC Bank)," the minister says in Mumbai.
     
    Speaking to reporters at Bharatiya Janata Party (BJP)'s office in Mumbai, Ms Sitharaman said that she would meet the RBI governor Thursday evening and convey the issues and urgency displayed by the PMC Bank customers.
     
    Earlier in the day, the Minister met distressed customers of PMC Bank in Mumbai, who were protesting outside the BJP office. 
     
     
    Ms Sitharaman further said that she has asked secretaries of the concerned Ministry to study in detail the shortcomings and if necessary look at ways in which the respective acts have to be amended. 
     
    She said that in the meeting to be held to decide on amendments in Act for better regulation, along with representatives from the finance ministry a deputy governor level officer of the RBI would also be present.
     
    The finance minister says she has explained to the (PMC Bank) customers that the RBI is taking action, doing what should be done as per the law. In such instances where there is malpractice and boards get bypassed, the central bank handles the matter, she added.
     
    During the conversation with the PMC Bank depositors, the finance minister also informed them that the finance ministry is working with rural development ministry.
     
    The PMC Bank fraud came to light in late September, when the RBI barred the bank from carrying out the majority of its routine business transactions for a period of six months, sparking panic among the depositors and sending shock-waves in the city banking and business circles.
     
     
    On Wednesday, customers of PMC Bank protested outside a Mumbai court.
     
    Carrying placards that read "No Bail, Only Jail", they accused the RBI of not taking strict action against the erring officials and appealed to Prime Minister Narendra Modi to intervene in the matter, says a report from NDTV.
     
    Days after fraud came to light, the now-suspended managing director of the bank Joy Thomas, in a letter to the RBI acknowledged the wrongdoing, and said the bank even opened a number of dummy accounts to replace the stressed accounts held by Wadhawans-led Housing Development and Infrastructure Ltd (HDIL).
     
    The economic offences wing (EOW) of Mumbai Police and the enforcement directorate (ED) are investigating the matter and have made few arrests and attached properties and assets so far.
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    COMMENTS

    Ranbir Lamba

    5 days ago

    Note my post of yesterday where FM said can't do anything. I had Recommended ammend the law & make it punative She has responded quickly & will set right for further safety of customers

    Umadevi

    5 days ago

    The root cause is the political influx to the board of many banks....and they will sanction loans to fraud entities. Cooperative banks in Kerala are forced to issue loans to State Road Transport Corp. and Electricity Board etc. which cannot be recovered as these enterprises are already loss making.

    lalit

    6 days ago

    Why only PMC, let the finance minister ask RBI on the status of all other cooperative banks to take preventative action right now so that such scams come out right now.
    Also RBI Governor and auditors should be held accountable for the collapse of PMC Bank since they are the one who monitor and do the audit of such banks.

    Dharam Vir Narang

    7 days ago

    When properties and assets of HDIL have been attached why normal banking has not still been restored for PMC customers. In case of other banks 2.75 lakh crs. have been written off so why different rules for banks operating in one Bharat (India).

    REPLY

    Girija Santhanam

    In Reply to Dharam Vir Narang 4 days ago

    If Money Life believes in responsible journalism, let them work out a framework by which such scams can be avoided in the future. Let Money Life can ask a few experts to recommend to Nirmala - what needs to be done. Instead of waiting for one more scam, can't the Finance Minister investigate the working of other co-operative banks? Why can't we have separate regulators only for co-operative banks? When we know that RBI doesn't have the capacity or wherewithal to carry out multiple audits, why not attack the root cause of the problem? Vigilance is no longer an option - it is the need of the hour.

    Sucheta Dalal

    In Reply to Girija Santhanam 4 days ago

    Ms Santhanam -- since you keep sending us a string of google-researched articles, we would have expected that you at least make the effort to understand what is journalism and media.
    First, we are not regulators. We cannot prevent scams. Do you even realise how silly you sound? You say you know RBI has not wherewithal to carry out multiple audits -- really? Then it should give up the job of being banking regulator.
    But you think Moneylife - a publication - has the wherewithal to get to the "root of the problem" --and then what? Do we have the power to implement?
    Also, since you have had articles published in Moneylife -- make an effort to visit Moneylife Foundation's website and understand it is a separate entity engaged in financial literacy. That must homework on your part is surely not too much to ask?

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