File Complaint Against PMC Bank Management, Angry PMC Depositors On RBI Move

The Reserve Bank of India-appointed administrator for Punjab and Maharashtra Cooperative Bank is likely to file a formal complaint against K Joy Thomas, the suspended managing director of the bank.

Last week, the RBI placed the bank under restrictions and subsequently dismissed the board and management of the lender. The regulator cited major financial irregularities, failure of internal controls and wrong/under-reporting of loan exposures as reasons behind the move.

Thomas, addressed the media on Friday in his personal capacity, and admitted that the bank has misreported its exposure to entities related to the Housing Development and Infrastructure Group.

“The decision to file the complaint came after Thomas admitted to misreporting loan level data to HDIL Group, JB Bhoria.

The inspection team from the RBI is still doing its work to collect proof regarding any wrongdoing at the bank. But now that Thomas has openly disclosed that there was hiding of loan information, we feel it is a criminal offence. A complaint will be filed soon.

In a relief to the crisis-hit Punjab & Maharashtra Cooperative (PMC) Bank customers, the Reserve Bank of India today increased the withdrawal limit from Rs 1,000 to Rs 10,000.

“Other terms and conditions of the said Directive shall remain unchanged. With the above relaxation, more than 60% of the depositors of the Bank will be able to withdraw their entire account balance,” RBI said in a statement.

“The above relaxation has been granted with a view to reducing the hardship of the depositors. The Reserve Bank is closely monitoring the position and shall continue to take further steps as are necessary to safeguard the interest of the depositors of the bank,” RBI said.

JB Bhoria, RBI-Appointed Administrator For PMC Bank

At a press conference on Friday, Thomas said that the cooperative bank had extended Rs 2,500 crore to HDIL Group and had not declare the outstanding loans as non-performing assets.

“The only wrong thing we did was breach exposure norms. But our exposure is covered by a lot of securities, which will ensure good recoveries,” he said, speaking about the bank’s HDIL exposure. According to Thomas, the bank’s board was also not aware of these loans extended to the group. The reason the bank’s management did not disclose these loans nor classify them as bad loans was primarily to not disclose these loans nor classify them as bad loans was primarily to not “hinder the bank’s growth”, he said.

Misreporting of loan exposures and under-reporting of stressed assets are serious violations of the RBI’s banking regulations and prompt stern action from the regulator.

K Joy Thomas has already gone and talked to the RBI about the fact that these loans were not disclosed. There was never any intention to cheat anyone. We hope and pray that the RBI does not engage in any criminal prosecution.

With serious violations detected at the lender, depositors of PMC Bank have been restricted from withdrawing deposits of more than Rs 10,000 from their bank accounts for a six-month period. The RBI has said that it may consider easing the restrictions further, if the financial position of the cooperative lender improve.

Punjab & Maharashtra Co-operative (PMC) Bank customers left stressed after the Reserve Bank of India (RBI) imposed withdrawal limits have lodged a complaint at a Mumbai police station, pointing out they have been cut off from their hard-earned money for no fault of theirs.
Simran, a domestic help who has Rs. 70,000 in savings, said that if the government wanted people to keep their money in banks it needed to guarantee its safety.

“Government says if we keep the money at home that is black money and if we keep in bank it is for safety. What safety as we talking about? My Rs. 70,000 is locked in,” she said, adding, “They say will give only Rs. 1,000. Where will I get the money now? I worked hard for my money”.

Anuradha Sen, a retired teacher living in Delhi wanted the RBI to tell her how to survive on Rs. 1,000 for six months.

“I have Rs. 20 lakh in this bank account. I survive out of the interest from that. Now the bank is almost non-functional. I can only take Rs. 1,000 in six months. The RBI should tell me how I can survive with just that much,” she said, adding, “We can’t bank on a Bank”.

On Tuesday the RBI limited withdrawals to a sum not exceeding Rs. 1,000 for six months in a move that led to panic and customers protesting outside PMC branches. There was some relief on Thursday with withdrawal limit raised to Rs. 10,000; the time period remains the same – six months.

The crisis began with the Housing Development and Infrastructure Limited (HDIL) defaulting on loans reported to be worth Rs. 2,500 crore. The bank failed to mention this in its annual report and continued to extend loans despite the company being taken for insolvency.

“HDIL as a group has been associated with us for almost 30 years now. They have been paying for 30 years but these few years they have been finding it difficult. That is the only problem,” Joy Thomas, the bank’s Managing Director, told NDTV.

As investigations continue, links between the 12 directors on the PMC board and the ruling BJP in Maharashtra are emerging; one of the directors is S Rajneet Singh – a three-time director who is the son of MLA Sardar Tara Singh.

“Yes, I am (the) son of Tara Singh but this has nothing to do with the matter. This is all opposition accusations because of elections. Directors are not at fault here.

File Complaint Against PMC Bank Management, Angry PMC Depositors On RBI Move via @goldsilverrepor
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