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RBI affidavit details how it was ‘fooled’ by scam-hit PMC Bank

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PMC Bank

Mumbai, Nov 19 : In a detailed affidavit filed before the Bombay High Court on Tuesday, the Reserve Bank of India (RBI) has virtually admitted that it was ‘fooled’ by the management of the scam-hit Punjab & Maharashtra Cooperative (PMC) Bank.

The affidavit, filed by Rajlaxmi Sethi, Assistant General Manager, Department of Co-operative Bank Supervision, RBI, states that PMC Bank had submitted fraudulently manipulated data to the central bank for sample checks, but “the sample of accounts picked for inspection did not contain undisclosed HDIL accounts.”

While the HDIL accounts shown by PMC Bank were seen by the RBI inspection team, a majority of them were declared as non-performing assets.

It added that the PMC Bank had also sanctioned mortgage limits to a wholly-owned subsidiary of the HDIL when the bank’s Chairman, the now arrested S. Waryam Singh, was also a director of the company — a clear conflict of interests and violation of the RBI’s Master Circulars to the effect of July 2010 and July 2012.

S. Waryam Singh also chaired a PMC Bank board meeting to approve the mortgage overdraft in which he was interested, again contravening RBI norms.

The RBI inspection team established the links between Waryam Singh and HDIL promoters/directors (now arrested), which could have helped them get credit facilities, and later to pay off one-time settlement of dues with other lenders, the affidavit said.

The scale of violation and the connected lending that was established, based on available records, was much lesser due to the ‘camouflaging’ resorted to by the PMC Bank, and hence what was noted was ‘flagged’, though it was not found to be significantly affecting the bank’s financial health.

On September 19, 2019, the RBI sent a team for the annual financial inspection of the PMC Bank and a thorough scrutiny of the HDIL accounts, with specific focus on the dealings and/or exposure of the bank with the HDIL group, besides other aspects.

The inspection was completed on November 2, 2019 and the report is currently being prepared, the affidavit said.

As per the preliminary findings, due to various financial irregularities, the PMC Bank’s networth had turned negative, with a significant erosion in deposits.

Detailing the “modus operandi of hiding the information related to HDIL exposure” employed by the PMC Bank, the RBI affidavit said they tampered with Management Information Systems and NPC Identification Process.

In this, the bank had given special access codes to the HDIL accounts with restricted visibility to less than 25 out of PMC Bank’s 1,800 staffers.

While running the script for system identification of the NPAs, it deliberately excluded the HDIL accounts which were thus omitted from the system generated reports of NPA accounts, and ditto with the Overdrawn Accounts list.

The PMC Bank’s own MIS software called ‘Opine’ had a script for generating lists of newly sanctioned/disbursed accounts, but the undisclosed loan accounts were missing from this list.

These irregularities were not highlighted by the PMC Bank’s concurrent auditors at the Sion Branch, where all these undisclosed accounts were parked though concurrent audits were carried out every month, the affidavit pointed out.

Besides, the undisclosed loan accounts to HDIL group, sanctioned and renewed by then PMC Bank Managing Director K. Joy Thomas (now arrested), were not recorded in the minutes of the Loan Committee, Recovery Committee, or the Board of Directors, though they constituted a vital source of information during inspection.

The affidavit said taht PMC Bank falsified information of offsite returns submitted to the RBI, false indent information provided to the RBI inspection team, and resorted to fictitious booking of profits, etc.

However, following a tip-off by an insider, a senior PMC Bank official, the RBI moved at top speed to arrest the slide and protect depositors/customers interests by slapping sanctions on the bank on September 23. It suspended its BoD and appointed an Administrator to evaluate the securities/collaterals provided by HDIL to auction them to recover the dues.

(Quaid Najmi can be contacted at: [email protected])

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FM Sitharaman may push for Rs 30K cr interim dividend from RBI to meet low revenue generation, slowdown

The government is fighting a six year low growth, subdued demand and consumption leading to projections of 5 per cent growth in current fiscal which is an 11 year drop.

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Nirmala Sitharaman
RBI governor Shaktikanta Das and FM Nirmala Sitharaman RBI governor Shaktikanta Das and FM Nirmala Sitharaman and at the post-Budget meeting (Picture Credit DNA)

The Finance Ministry is likely to push for Rs 25,000-30,000 crore interim dividend from RBI, for the third time in a row, to check slippages in the fiscal deficit of 3.3 per cent in 2019-20.

The central bank and government may touch upon the issue when Finance Minister Nirmala Sitharaman will meet RBI Governor Shaktikanta Das at post Budget Vision customary meeting.

Government has a Budget estimate of Rs 90,000 crore dividend from RBI in FY20. RBI follows a fiscal of July-June. The interim dividend of the RBI’s total dividend for 2019-20 (July-June) can help the government check 3.3 per cent fiscal deficit target slippage.

In the past RBI has paid a total Rs 38,000 crore as interim dividend (Rs 28,000 crore in FY19 and Rs 10,000 crore in FY18).

“If the RBI board recommends, then it will be the third time when interim payout will be given to the government,” said sources.

The central bank had paid Rs 28,000 crore as interim dividend from its 2018-19 fiscal accounts (July-June) in February, which helped the government contain deficit at 3.4 per cent in the last fiscal.

The Reserve Bank follows July-June financial year and usually distributes the dividend in August after annual accounts are finalised and interim dividends if any, they are given around February to the government.

Seeking interim dividends are not common. The Bimal Jalan-led committee on the RBI’s economic capital framework recommended in August that an interim dividend should be paid to the government only in “exceptional circumstances”.

The Finance Ministry’s contention is that this year has “exceptional circumstances” because of the slowdown, low revenue generation and outgo of Rs 1.45 lakh crore due to corporate tax cuts.

For 2018-19 (July-June), the RBI transferred a total of Rs 1.76 trillion to the central government, including a one-time transfer of Rs 52,637 crore which was deemed as excess reserves and comprising Rs 1,23,414 crore of surplus for the year 2018-19.

The government is fighting a six year low growth, subdued demand and consumption leading to projections of 5 per cent growth in current fiscal which is an 11 year drop.

On Monday, the International Monetary Fund (IMF) slashed India’s FY20 growth forecast to 4.8 per cent, besides trimming global outlook and said India’s slow growth is dragging down the world economy.

The Finance Ministry might seek the interim dividend from the RBI to meet some of the financial pressure due to the low revenue generation from taxes and disinvestment and slowdown, said the sources.

The RBI largely earns profits on its trading of currencies and government bonds. Part of these earnings are set aside by the RBI for its operational and contingency needs while the rest is transferred to the government in the form of dividends.

The Union Budget 2019-20 had pegged dividend or surplus of the RBI, nationalised banks and financial institutions at Rs 1.06 lakh crore up from Rs 74,140.37 crore realised in the previous fiscal.

(Anjana Das can be contacted at [email protected])

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31% Goa IT workers battle hypertension, 40% overweight: Study

“Thirty seven (31.4 per cent) had hypertension, 50 (42.4 per cent) suffered from pre-hypertension… 13 (11.2 per cent) had diabetes mellitus and three (2.5 per cent) blood sugar in pre-diabetic range,” the study noted.

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Panaji, Jan 20 : Nearly 31 per cent of the IT sector workforce in Goa suffers from hypertension whereas more than 40 per cent are either overweight or obese, a cross-sectional study of IT professionals working in the coastal state has revealed.

“A majority of the 118 surveyed employees — 63 (53.4 per cent) — had normal range body mass index, seven (5.9 per cent ) were underweight, 40 (33.9 per cent) overweight, six (5.1 per cent) class I obesity and two (1.7 per cent ) class II obesity,” the study by Preksha P Vernekar, Kalyani and Jagadish A Cacodcar said.

“Thirty seven (31.4 per cent) had hypertension, 50 (42.4 per cent) suffered from pre-hypertension… 13 (11.2 per cent) had diabetes mellitus and three (2.5 per cent) blood sugar in pre-diabetic range,” the study noted.

“A significant prevalence of lifestyle diseases is noticed among the participants in the study. Lifestyle diseases like hypertension, diabetes, dyslipidaemia and overweight/obesity are major risk factors for the development of cardiovascular disease,” as per the study published in the Epidemiology International journal.

Considerable pre-hypertension cases raised concern over possible cardiovascular morbidities along with complications in due course of time, the research paper’s authors pointed out.

The study data was collected from health records of 118 IT professionals working in four top Information Technology firms in Goa, whose government is pitching the coastal state as a destination for IT start-ups.

The study authors, all medical professionals working at the state’s top government-run medical facility, also underlined the need for periodic health checkups to ensure timely detection and early management of health problems.

“The companies should have mandatory periodic health check-ups of their employees, preferably at their health centres, to gain better insight into their general health status.

“Pre-placement examination of employees is must to know their working capacity so as to ensure ergonomics as well as to procure first-hand knowledge on health problems workers may be suffering from before employment,” the study recommended.

The study suggested the introduction of stress-busting modules in the IT work space to ensure better physical and mental health of staff, which ensured better performance by the workforce.

“Health education on diet, physical activity and relaxation techniques such as yoga and meditation can be imparted to employees. These steps will finally improve their performance and in turn lead to decreased incidence of morbidities, absenteeism due to sickness and job stress, thereby leading to optimum work output,” the study said.

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BJP denies tickets to 3-time MLA Kulwant Rana, 25 others

Rana became the youngest candidate to win the elections in 2003, while he retained his seat from Rithala constituency in 2008 and 2013 too.

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New Delhi, Jan 17 : The Bharatiya Janata Party (BJP) on Friday announced the first list of candidates for the Delhi Assembly elections to be held on February 8.

In its first list, the party announced 57 candidates while it denied tickets to 26 leaders, including former state vice president and three time MLA Kulwant Rana.

Rana became the youngest candidate to win the elections in 2003, while he retained his seat from Rithala constituency in 2008 and 2013 too.

The BJP has still not announced its candidates for 13 seats, including New Delhi, Mehrauli and Sangam Vihar.

The party has fielded Manish Chaudhary in place of Rana from Rithala. Sources said the party denied a ticket to Rana as he was involved in some controversies.

Similarly, Rajni Abbi has been replaced by Surendra Singh Bittu in Timarpur, while Rajesh Yadav from Badli, Gugan Singh Ranga from Bawana, Prabhu Dayal from Sultanpur Majra, Surjeet from Mangolpuri and Nandkishor from Trinagar have not been given tickets for the upcoming Assembly polls.

The party has also denied the ticket to Vivek Garg, who lost the elections in 2015 from the Model Town seat, and fielded former AAP Minister Kapil Mishra, who joined the BJP after quitting AAP.

The party has also denied tickets to Praveen Jain from Sadar Bazar, Shyam Lal from Ballimaran, B.B. Tyagi from Laxmi Nagar, Jitendra Chaudhary from Gandhi Nagar, Sanjay Jain from Seelampur, Ajay Mahawat from Ghonda and Krishna Teerath from Patel Nagar.

The party has also changed the candidates in Janakpuri, Uttam Nagar, Palam, Jangpura, Malviya Nagar, Ambedkar Nagar, Greater Kailash, Kondli and Patparganj.

(Navneet Mishra can be reached at [email protected])

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