The main reason why the Punjab and Maharashtra Cooperative (PMC) Bank is in deep trouble is because the bankrupt Housing Development and Infrastructure Ltd (HDIL) (tottering Dewan Housing Finance Ltd-DHFL is also of the same promoter group) had a finger in the Bank. It was not a case of one bad lending.
There was a close nexus between the HDIL group and the Bank through Waryam Singh, the chairman of PMC Bank. He was director of several companies associated with HDIL group and the Wadhwans.
PMC Bank’s managing director (MD) has been on television providing false platitudes and feigning ignorance of the loot of depositors’ money and also claiming that Mr Singh had resigned from the HDIL group in 2015. The very fact that the Bank is over-extended to this group is proof that the nexus is as strong as ever.
The government and the regulator are doing a great disservice to depositors by permitting the MD to put out half-truths. Ideally, we need answers from the government. Also, like in the case of Infrastructure Leasing & Financial Services (IL&FS), we need to change management, sack those who were responsible and act fast to salvage public funds.
The failure of PMC Bank is already beginning to impact even the better-run cooperative banks that are seeing worried depositors wanting to ring-fence at least a part of their funds. If the situation is allowed to fester, things can get worse.
It is surprising that while the banking regulator, Reserve Bank of India (RBI), acts extremely tough about giving new bank licences, it was either completely oblivious or knew, but did nothing about this nexus. The result of this regulatory failure today is that tens of thousands of depositors are on the streets worried about their money.
Following the death of Charanjit Singh Chadha on 12 January 2015, PMC Bank board elected Waryam Singh as new chairman for five years till 2020.
Mr Singh, in 2009, was listed among individuals forming part of the promoter group of HDIL group in an information memorandum for issue of privately placed debentures. Even if he resigned in 2015, it is clear that the deep relationship with HDIL and its many group companies persisted.
Here is what is available in the public domain.
Waryam Singh’s association with the Wadhwans dates back to 17 January 1997, when he was made director of DHFL Property Services Ltd from where he resigned on 27 March 2009. Before resigning in March-April 2015, Mr Singh had served as director of HDIL for almost nine years. Data from Zaubacorp.com shows Mr Singh has served as director of several HDIL group companies for several years.
In Blue Star Realtors Pvt Ltd, Mr Singh was allocated just one share. However, this single share establishes closeness of the relationship between him and the HDIL group.
Mr Singh was a director of Ravijyot Finance & Leasing, another group company associated with the Wadhwans.
Mr Singh, who is the chairman of PMC Bank, was shown as promoter of Broadcast Initiatives Ltd (erstwhile Sri Adhikari Brothers News & Television Network Ltd) in the company’s draft letter of offer in March 2011. The other promoters in Broadcast Initiatives were: Rakesh Kumar Wadhwan, Sarang Wadhwan, Ashok Kumar Gupta and HDIL Infra Projects Pvt Ltd.
In Guruashish Constructions Pvt Ltd, Mr Singh was representing HDIL group along with Rakesh Kumar Wadhwan.
As per data from Zaubacorp, Waryam Singh has been shown as director of 18 companies, many of them related with the Wadhwans. (see image below)
You may also want to read…