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Ignorance or Incompetence? No RBI Notice to Crisis-hit PMC Bank Since 2014 Despite Checks, Reveals RTI Reply

People wait outside a PMC Bank branch in Mumbai. (Reuters)

People wait outside a PMC Bank branch in Mumbai. (Reuters)

In its reply, the RBI said there was no occasion for it to forward any complaint to authorities before September 2019 since that was the first time received a complaint.

New Delhi: Call it incompetence or ignorance but the Reserve Bank of India (RBI) apparently had no clue about the Rs 4,300-crore PMC Bank scam and its connection with bankrupt realtor HDIL before a complaint was made in September 2019.

The revelation has come by way of an RTI response received from the apex banking regulator. The RBI, in the RTI reply, admits it issued no notice or warning to the Punjab & Maharashtra Co-operative (PMC) Bank since 2014.

The records prior to 2014 have already been destroyed as per its record management policy.

The application, moved under the Right to Information (RTI) Act by CNN-News18, had asked for the inspection reports of the scam-hit bank, apart from copies of the notices and penalty orders against the PMC Bank.

The RTI reply said while the inspection reports for the financial year ending March 31, 2019, is under process, the RBI has asked for the views of the PMC Bank regarding reports for the period between 2015 and 2018.

“No warning/cautions/advisories and penalties have been imposed on the bank since 2014,” maintained the reply, making it clear that despite the inspections being carried out, either the RBI was clueless or that its officers too had some role to play in the scam which has affected more than 15 lakh customers across six states.

The RBI has refused to disclose the names of the officers who conducted the inspections between 2014 and 2018 under Section 8(1) (g) of the RTI Act, which prohibits disclosure in the interest of physical safety of a person or source of information.

The response has added that information prior to April 2014 is not available with the RBI since the correspondence files prior to April 2014 have been destroyed as per its record management policy.

It also said that the RBI did not receive any complaint prior to September 2019 regarding the irregularities pertaining to HDIL transactions in PMC Bank since April 2014. Hence, the RBI added, there was no occasion for it to forward any complaint to authorities before September 2019 since that was the first time received a complaint.

Following a statutory inspection, the central bank imposed severe restrictions on the multi-state co-operative bank on September 23, after it found prima facie evidence of financial irregularities, including huge under-reporting of loans and non-performing assets to real estate developer HDIL using hundreds of fictitious accounts. The RBI had then sacked the board of the bank and appointed an administrator.

The Economic Offences Wing (EOW) of Mumbai Police as well anti-money laundering agency Enforcement Directorate are currently investigating into various alleged criminalities and have also arrested top officials of PMC Bank and HDIL.

But it should be too naïve for the RBI to not share the blame for the distress caused to over a million hapless customers of the bank who have been made to run from pillar to post while the central bank admits it could not find even one instance of irregularity in the PMC bank between 2014 and 2018, warranting an intervention.

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