In the past one week, three elderly people passed away in Mumbai while undergoing medical treatment, but without access to their savings at the beleaguered Punjab and Maharashtra Cooperative (PMC) Bank. According to the PMC Bank Depositors’ Association, 50 depositors, majority of whom were older people, have died in the past 10 months due to the financial distress and suicides as their deposits got frozen at the bank. Depositors are urging the Reserve Bank of India (RBI) to immediately find a solution for the bank only to save their families.
On July 25, 53-year-old Vijay Chaudhary died in a private hospital in Mumbai while undergoing treatment for his kidney ailment. Chaudhary had his savings in the PMC Bank, but as his family struggled to clear medical expenses, reportedly, the hospital has delayed in releasing the dead body.
The COVID-19 pandemic has worsened the lives of thousands of PMC bank depositors, said Daisey C, a depositor at a PMC Bank in Delhi. “For the last 10 months, thousands of depositors whose money got stuck at the bank are struggling to make ends meet. Many depositors are helping each other in emergencies in this pandemic,” says Daisey, adding that the government or the RBI did not even assure [them] that “our money will be returned”.
Last week, the Delhi High Court sent notices to the PMC Bank, the RBI and the central government to respond on a plea seeking directions to allow the bank’s depositors to withdraw up to Rs 5 lakh for medical emergencies caused by COVID19.
Earlier this month, the RBI governor Shaktikanta Das had said that the central bank is trying to find a solution for the bank. “With regard to the PMC Bank, the Reserve Bank is engaged with all stakeholders to find out a workable solution, as losses are very high, eroding deposits by more than 50%,” said Das while speaking at the 7th Banking and Economic Conclave organised by State Bank of India.
On the other side, the Economic Offences Wing (EOW) of the Mumbai police and the Enforcement Directorate are probing the fraud at the PMC Bank. According to RBI, some officials of the PMC bank have fraudulently masked 44 dodgy loan accounts involving advances to the tune of Rs 7,457.49 crore to some entities, including real estate firm Housing Development and Infrastructure Ltd (HDIL), by tampering with its core banking system.
HDIL Group’s Chairman Rakesh Wadhwan, his son Sarang Wadhwan, bank’s former Chairman Waryam Singh and bank’s Managing director Joy Thomas have been arrested last year and are under judicial custody. The Mumbai police have named PMC Bank directors, Gurnam Singh Hothi and Daljit Singh Bal for their alleged involvement in the scam.
Reportedly, around Rs 4,000-crore property of the HDIL promoters is mortgaged at the bank.
According to PMC Bank’s annual report 2018-19, the bank had total deposits of Rs 11,617.34 crore and advances of Rs 8,383.33 crore. In 2018-19, the cooperative bank posted total revenue of Rs 1,297.98 crore. The revenue was recorded as Rs 1,170.49 crore in 2017-18.
Last month, the RBI increased the PMC bank’s withdrawal limit to Rs 1 lakh saying that more than 84% of the depositors of the Bank will be able to withdraw their entire account balance.
“An elderly person who had over Rs 1 crore of his savings in PMC bank has started selling milk in his neighbourhood in Delhi to make living,” said Daisey.
Before the lockdown was imposed for the containment of coronavirus, PMC bank depositors had staged numerous protests in Mumbai and Delhi. The depositors have formed an association to help among themselves and to put forward their demands and concerns to the RBI.