RBI flagged violations in PMC in 2007: Report

RBI flagged violations in PMC in 2007: Report

The RBI had imposed Rs 5 lakh penalty on PMC Bank in 2007 after it found a violation. Officials told ET that the PMC Bank turned a blind eye on the RBI's findings. (PTI Photo)

The Reserve Bank of India (RBI) in 2007 had flagged irregularities like 'window dressing' of balance sheets and violation of loan guidelines at the fraud-hit Punjab and Maharashtra Co-operative Bank, according to a forensic audit by PMC Bank accessed by The Economic Times.

The RBI had imposed Rs 5 lakh penalty on PMC Bank in 2007 after it found a violation. Officials told ET that the PMC Bank turned a blind eye on the RBI's findings.

“The window dressing (to show a better picture than the actual position) of accounts happened earlier also and the second, had the bank acted in time, they could have prevented the fraud from happening which has left so many account holders in a lurch,” an official told ET.

This week, the Enforcement Directorate filed a charge sheet against Housing Development Infrastructure Ltd (HDIL) promoters Rakesh Wadhawan and Sarang Wadhawan in connection with the multi-crore PMC Bank scam.

The PMC Bank, which has around 16 lakh depositors, was placed under an RBI administrator on September 23, 2019, for six months due to massive under-reporting of dud loans.

The bank, over a long period of time, had given more than Rs 6,700 crore in loans to HDIL, which is 73 per cent of its total advances, and which turned sour with a shift in the fortunes of the now-bankrupt company.

Its total loans stand at around 9,000 crore and the deposits at over Rs 11,610 crore.

There have been massive protests across the city from the PMC Bank depositors following the RBI action.

Twelve people, including top officials of the PMC Bank and HDIL, have so far been arrested by the EOW in connection with the scam

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