PMC scam now the talking point

Punjab Maharashtra Co-operative Bank (PMC) in Mumbai, Maharashtra (Photo by Reuters)

The collapse of the PMC Bank has snowballed into a political issue in poll-bound Maharashtra including Mumbai. The PMC Bank crisis is already one of the talking points in Mumbai, the financial capital of the country, and its suburban areas, which together have close to 60 of the 288 Assembly seats of the state, which is set to see elections on October 21.

The ill-fated bank that clamped restrictions of initially withdrawing no more than Rs 1,000 and then enhanced to Rs 10,000 and further to Rs 25,000 - has the biggest depositor base in Mumbai metropolitan region. Bulk of the customers of the 1984-founded bank are from the Sikh community-dominated Guru Teg Bahadur Nagar in Mumbai.

There have been protests daily since the last one week with depositors seeking justice. As of now, the total scam is pegged at Rs 4,355 crore.

A political blame game has already started. The Congress has slammed the BJP-led Central government for the Bank crisis. “Whether it is because of the finance ministry or the RBI, why should the depositors suffer?,” Maharashtra Pradesh Congress Committee working president Muzaffar Hussain asked.

The NCP has adopted a cautionary note as the Mumbai police and the Enforcement Directorate has booked party’s founder-president Sharad Pawar and his nephew and former deputy chief minister Ajit Pawar in the Rs 25,000 crore Maharashtra State Co-operative Bank Scam.

On the other hand, senior BJP leader and former MP Kirit Somaiya has been demanding action against the bank’s management and that of crisis-ridden real estate company, Housing Development & Infrastructure Ltd (HDIL), to which it extended loans.

“The bank extended unprecedented amounts as loans to HDIL. Of the total loans, around 40% are to the HDIL. The construction company is facing trouble since 2018. The loan extended has not only gone to this company but also to benami entities. We demand that criminal action be initiated against the managements of both,” Somaiya said.

The ramifications from the point of view of the public will be much more than reported. The Mumbai Grahak Panchayat (MGP), which is engaged in consumer education and consumer protection activities, has started an online survey.

MGP chairman Shirish Deshpande will be taking up the issue with the finance ministry and the RBI. Vishwas Utagi, convenor, PMC Depositors’ Association and co-convenor, Trade Union Joint Action Committee, Maharashtra, said depositors are planning to file a writ petition in the Bombay High Court.

Financial analyst Pankaj Jaiswal said in the scenario of this slowdown economic environment, RBI should not take harsh decisions. “It is like this - penalising innocent small depositors instead of the culprits. In the co-operative banks, depositors are not in high income brackets,” he said.

The Economic Offences Wing of the Mumbai police has booked erstwhile PMC Bank chairman Waryam Singh, managing director Joy Thomas, HDIL promoters Sarang Wadhawan and Rakesh Wadhawan. The Wadhawans and Thomas have been arrested while search is on for Singh. The PMC Bank’s Bhandup branch manager lodged the complaint on behalf of RBI-appointed administrator J H Bhoria.

Sharp reactions

There have been sharp reactions from the customers. “@PMC_Bank” says they are under 35A of BR by the @RBI and the thing is I have all my savings stuck in that bank and they say I cannot withdraw my money now.. What do I do.. People here have all their savings in the bank and the bank says they can’t help,” customer Avinash Sharma tweeted.

Another customer Praful Shah tweeted: “#PMCBank Its nothing but bankruptcy. My 25 lakhs, saved for daughters’ marriages, are now trapped. My lifetime saving getting washed out overnite. Feeling sad.” What is ironical is that a huge amount of Rs 40 lakh of Surjit Singh Kochhar is stuck. His late brother, Gurcharan Singh Kochhar was one of the founders. “Our hopes have come crashing down,” a family member said.

In a related development, the Sikh community has excommunicated eight members on the board of directors including Waryam Singh, the former chairman. The meeting was held at Sri Guru Singh Sabha at Dadar. They have been stripped off the membership of gurudwaras, community trusts and also form attending gatherings like the 550th birth anniversary celebrations of Guru Nanak.

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