PMC Bank Fraud Case

The former PMC bank is now called the Unity Bank. PMC bank stands for Punjab and Maharashtra Cooperative bank. It is one of the oldest cooperative banks in India. The Bank offers a range of banking and financial services and products to suit the needs of its customers. Daljit Singh Bal, Former director of the PMC bank, was apprehended for the fraud case. The Mumbai police EOW has imposed a multi-crore scam case against Daljit Singh Bal and ten former bank directors. This fraud case was first highlighted in September 2019. Details about the fraud can be found below.

PMC bank

PMC Bank is one of the few Indian banks that employ a three-tier strategy wherein banking for the wealthy, middle class, and marginalised. PMC Bank has been ranked as one of India’s most egalitarian banks.

PMC Bank, headquartered in Mumbai, is the third-largest private sector bank in India. The 108 years old banking institution has over 618 branches across the country & 12 overseas offices to offer its customers a wide range of financial products like loans, deposits, and mutual funds through its digital banking platform PMC-24×7. PMC Bank was incorporated on 4th July 1933, under The Punjab and Maharashtra Co-operative Societies Act 1938. The bank is owned by the State Cooperative Banks’ Federation of India Limited. Now the former PMC bank has changed its name to the unity bank.

The PMC fraud case

In September 2019, the Reserve bank of India took control of the PMC bank, and the operational management was in the hands of the RBI for six months. 

The investor public starts to panic and reach out to the nearest branches. RBI then increased the limit of withdrawal to 10,000 and 25,000. Joy Thomas, Former managing director of PMC bank, cheated the bank boards, the auditors, the government, and the Reserve Bank of India for many years by concealing the faulty loan records of ₹6,500 crores. These ₹6,500 crores were taken by Housing development and infrastructure limited (HDIL), a real estate firm.

Thomas admitted everything and tried to explain the circumstances under which he took such decisions in the letter he wrote to the Reserve bank of India. He still believes that the Housing development and infrastructure limited firm will repay the amount, and things will get on track. He presented the whole roadmap to recover the parts of the loan.

In his confrontation, Thomas also said that he took this decision because HDIL and the bank have been doing business together since 1990 and share good relations. He added that he concealed the information to safeguard its reputation and the bank itself. The large account data was not transferred to RBI because of the risk to their name’s reputation.

In Feb 2022, the former director, Bal, was taken under custody.

This fraud case came to light after the Reserve bank of India noticed that PMC bank created fictitious accounts to hide over 4,300 crore loans to the firm, which was on the verge of bankruptcy at that time. According to the RBI, the PMC bank covered 44 fake and problematic loans, and HDIL was included in these accounts.

Arrests made

A total of 12 people were taken into custody in the money laundering and fraud case.

• Daljit Singh Bal – Former director of PMC bank

• Rakesh Wadhawan – (Founder) Chairman and managing director of Housing development and infrastructure limited

• Sarang Wadhawan – Son of Rakesh Wadhawan, arrested for loan fraud.

• Jagdish Mookhey – Former director of Reserve bank of India

• Mukti Bavisi – Former director of Reserve bank of India.

• Trupti Bane – Former director of Reserve bank of India.

• Mehul Thakur – Managing director of Viva group

• Madangopal Chaturvedi – consultant of Viva group.

• Professor PD Sarabhai 

• Dr R.C. Thakur

The main accused fraudster, Daljit Singh, was arrested in Bihar. He was arrested 200 metres from the Nepal border while planning to flee for Canada via Nepal. Daljit Singh cleared the loans of HDIL, leading to the crisis in the bank.

Rakesh Wadhawan, the founder of the HDIL company, pleaded for bail because of medical conditions. The supreme court sanctioned his bail and allowed him for the needed surgery. 

The Economic Offences wing seized property owned by the HDIL firm. The property costs about ₹3,5000 crores itself.

During such a crisis, PMC bank has faced many financial issues such as a loss of customer trust, and there is a whole chain effect among all its other banking partners because of this issue. There have been many disputes between HDIL and PMC Bank. HDIL has also filed cases against PMC bank and has taken them to court. 

Conclusion 

This fraud case shocked the whole nation. Some directors were very well-known people in the banking sector and the government sector itself. This case might get concluded soon. This fraud case brought a lot of troubles to the nation and the whole banking sector. The PMC Bank has been in the trust of the RBI, and they are trying to recover the money with their means to avoid any further impact on customers, investors, and shareholders. There is a hint that several other big banks have given loans to this firm without proper records.