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PMC scam: Central bank employees union wants cooperative banks under full control of RBI
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  • PMC scam: Central bank employees union wants cooperative banks under full control of RBI

PMC scam: Central bank employees union wants cooperative banks under full control of RBI

Press Trust of India • October 15, 2019, 17:44:17 IST
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In the wake of the scam at Punjab & Maharashtra Cooperative (PMC) Bank, the All-India Reserve Bank Employees Association on Wednesday suggested ending the dual jurisdiction of urban cooperatives and bringing them under RBI jurisdiction

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PMC scam: Central bank employees union wants cooperative banks under full control of RBI

Mumbai: In the wake of the scam at Punjab & Maharashtra Cooperative (PMC) Bank, the All-India Reserve Bank Employees Association on Wednesday suggested ending the dual jurisdiction of urban cooperatives and bringing them under RBI jurisdiction. The union also said RBI should carry out onsite supervision of all cooperative banks instead of the present annual offsite supervision.

It is clear that PMC Bank fudged their accounts & reported wrongly to concerned authorities; Finance Ministry & RBI are working out a system to prevent recurrence of such scams, says RBI Employees Union Association pic.twitter.com/RsguxrmkBp

— CNBC-TV18 (@CNBCTV18Live) October 15, 2019

PMC is under regulatory restriction since 23 September after the RBI found that financial irregularities at the bank. Since January, the RBI had placed as many as 24 cooperative banks under its administrator. “Dual jurisdiction of urban cooperatives under the registrars of cooperative societies of states and RBI should end. It creates unwarranted dichotomy and gives scope for mismanagement and malfeasance. They should come exclusively under the RBI jurisdiction like banks,” the union said. Urban cooperative banks are registered as cooperative societies either with the State Cooperative Societies Act of each state or under the Multi-State Cooperative Societies Act of 2002. They are regulated and supervised by the Registrar of Cooperative Societies of states or by the Central Registrar of Cooperative Societies. [caption id=“attachment_7404161” align=“alignleft” width=“380”]PMC Bank. PTI photo PMC Bank. PTI photo[/caption] The RBI only regulates and supervises their banking functions and thus has less control on management and carries out on-site inspections and off-site surveillance on them. It also issues operational directions to them to streamline their functioning and to protect the interest of depositors. “All cooperative banks, particularly their head offices, should be brought under the regular on-site supervision of RBI instead of the present offsite surveillance which has failed to detect fraudulent reporting,” the union said. Last month, RBI had put a slew of restrictions on PMC for six months after it was found that its exposure to real estate developer HDIL was close to Rs 6,500 crore, or a full 73 percent of its total loan book size of Rs 8,880 crore. The bank had given these loans without proper due diligence and also hid the actual exposure and NPAs of the company from its board and RBI. The city-based cooperative, amongst the top 10 in the country, continued to give loans to HDIL even as it defaulted on its previous loan repayments. Even on 30 August, it had extended Rs 98 crore to HDIL to repay to Bank of India, which was taking it to the bankruptcy court. RBI had also barred the bank from further lending and accepting fresh deposits. Initially, it had capped withdrawals at Rs 1,000 per depositor for over six months but later relaxed to Rs 10,000, Rs 25,000 and on Tuesday again relaxed to Rs 40,000. With this, about 77 percent of depositors will be able to withdraw their entire account balance. The economic offence wing of the Mumbai Police is investigating the matter.

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RBI Reserve Bank of India banking NewsTracker Money laundering HDIL Mumbai Police Police Custody Economic Offences Wing Sarang Wadhawan EoW Rakesh Wadhawan PMC Bank PMC Bank crisis Punjab & Maharashtra Cooperative Bank Joy Thomas Waryam Singh PMC Bank depositors Housing Development and Infrastructure Ltd Rakesh Kumar Wadhawan PMC Bank fraud PMC Bank scam PMC Bank cash withdrawal limit
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