DH Exclusive: 30% depositors own 92% money in PMC Bank

The scam-ridden Punjab and Maharashtra Co-operative Bank (PMC Bank) has just 30% of its depositors controlling 92% of its deposits. The urban cooperative bank (UCB) has 70% of its accounts with a total balance below the withdrawal limit of Rs 25,000 set by the Reserve Bank of India.

Of the Rs 11,617 crore deposits with the bank, only Rs 898 crore was owned by depositors with a balance of less than Rs 25,000. “PMC Bank is supposed to be a co-operative bank. And this is how they manage the risk. This looks like a clear case of fraud. Basically they were crowding the deposits and advances in a particular set of accounts — violating the norms of risk,” sources told DH.

The central bank had enhanced the withdrawal limit of the PMC bank initially from Rs 1,000 to Rs 10,000. It gradually increased the withdrawal limit to Rs 25,000 after reviewing the liquidity position of the Mumbai-based co-operative bank. The RBI said that 70% of the depositors can withdraw their full balance after the current move.

The UCBs are primary cooperative banks located in urban and semi-urban areas. These banks, till 1996, were allowed to lend money only for non-agricultural purposes. These banks were traditionally centred around communities, localities and workplace groups. They essentially lent to small borrowers and businesses.

Earlier, it was revealed that the bank had lent a whopping 75% of its Rs 8,383.33 crore loan book to just one entity — real-estate firm HDIL. The bank’s chairman S Waryam Singh was also director of the HDIL till 2015 and owned 1.9% stake in the realtor till 2017 — a clear case of conflict of interest. HDIL is owned by the father-son duo of Rakesh Wadhawan and his son Sarang Wadhawan.

The Enforcement Directorate, which is looking into the frauds done by the duo, has seized 12 high-end cars from them. The ED has also found that HDIL was one of the sponsors of IPL team Kolkata Knight Riders — a team owned by Bollywood star Shahrukh Khan. Many people who have known the father-son duo for years, confessed to DH that family used to lead an extra lavish lifestyle by increasing the debt of the banks.

The fraud at the PMC Bank was unearthed after RBI exercised the powers under Section 35 (A) of the Banking Regulation Act to curb withdrawals by the depositors of the Bank.