Before readers go through the PMC bank scam it is important for them to understand the background of  PMC bank:-

♠ PMC stands for Punjab and Maharashtra Co-operative Bank.

♠ The bank started on February 13,1984

♠ The bank has a wide network of 137 branches across six states.

♠ The Bank stands among top 10 co-operative banks of the country.

Lets understands the PMC Bank Scam:-

The higher management of PMC Bank has given 70% of total credit facilities to HDIL (Housing Development and Infrastructure Limited) and its associates companies.It is found that around 21000 accounts were opened by bogus names to conceal 44 loan accounts.

The PMC bank’s Relationship with HDIL started in 1986-87.The size of the bank in 2011 was around 57 branches with deposits of Rs.2824 Crore and advances of Rs.2000 Crores.The exposure of HDIL group then was Rs 1026 crore.

If the PMC Bank classified them as non-performing assets (NPAs), PMC bank  would have to stop charging interest on these accounts and PMC Bank could have made losses. The growth path of the bank would have got hampered.

As the loans outstanding were huge and if these were classified as NPA it would have affected the profitability of the bank and the bank would have faced regulatory action from RBI also. PMC Bank continued to report all accounts as standard accounts. Though some of the accounts were not performing well, it was not brought to the notice of the Board. The subsequent overdues of various loans were also not reported to the Board.

What Stautory Auditor’s Do:-

The statutory auditors, due to their time constraints, were checking only the incremental advances and not the entire operations in all the accounts. They scrutinised the accounts which were shown to them. The stressed legacy accounts belonging to this group (HDIL) were replaced with dummy accounts to match the outstanding balances in the balance sheet

When the scam was busted:-

The bank fraud case is busted by a bunch of women employees of the credit department of the PMC Bank.These employees  told to the RBI that they were aware of the bogus account.

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Qualification: CA in Job / Business
Company: VSPV & Co
Location: New Delhi, New Delhi, IN
Member Since: 23 Oct 2019 | Total Posts: 1

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