RBI warned on PMC Bank management

RBI warned Delhi PMC top boss was unfit to head bank

RBI wrote in 2017-18 to Central Registrar of Cooperative Societies, controlled by the Union Ministry of Agriculture, currently headed by Parshottam Rupala.

The collapsed Punjab and Maharashtra Cooperative Bank’s (PMC) chairman Waryam Singh was declared unfit to head the bank by the Reserve Bank of India (RBI), but the Central Registrar of Cooperative Societies did not act on the warning.

While all the criticism around PMC Bank’s collapse has so far has been targeted at the bank’s management as also the RBI, it has now emerged that the BJP-led Union government too did not do anything to protect depositors’ interest.

The Central Registrar of Cooperative Societies (CRCS), the regulatory authority for multi-state cooperative banks such as PMC, is controlled by the Union Ministry of Agriculture, currently headed by Parshottam Rupala.

The RBI alerted CRCS in 2017-18 that Waryam Singh should not be heading the bank as he was involved in granting loans without any due diligence to HDIL, with which he was associated till 2015.

Waryam Singh was a director on the board of HDIL from 2006 to 2015 and held a 1.91 per cent stake in the company. He sold his stake in 2015 and stepped down from the HDIL board.

Had CRCS acted on the RBI recommendations, PMC Bank could have been saved.

PMC Bank depositors at a protest on Tuesday at the RBI’s BKC office; (inset) bank chairman Waryam Singh

An email sent to the central registrar of cooperative societies Abhilaksh Likhi on Tuesday afternoon remained unanswered at the time of going to press. The mail was sent after this newspaper got in touch with his office and was told that he was busy in a meeting and will only be able to answer email queries.

There was no response to phone calls made to Waryam Singh too. Text messages left on his mobile phone too went unanswered.

Over Rs 6,000 crore that HDIL owes PMC is the main reason why the bank has collapsed. Interestingly, the extent of scam detected so far is based only on an assessment of close to 23 per cent of the band loan accounts which should have been disclosed by the bank to the Reserve Bank of India in its annual report last year. There are total 44 loan accounts which were allegedly hidden by the bank officials, of these only 10 have been assessed.

The suspended managing director of the bank Joy Thomas in his confession letter given to the RBI has said that “the bank’s total exposure to HDIL group was around Rs 6,500 crore and to hide this 21,049 fake accounts were created.” This information, according to Thomas, “was concealed from the Board, auditors and regulators due to fear of loss of reputation.”

Thomas also said in that the concealment of nonperforming assets in the bank was going on since 2008. The letter also says, he and five other executives of the bank, including Waryam Singh, were involved in the disbursal of new loans to HDIL.