PMC depositors left high and dry face the worst amid COVID crisis

Depositors suspect RBI made an example out of them to bring all co-operative banks under its control

Depositors protesting at a PMC Bank branch in Mumbai. Photo: Harish Upadhya

Roopa Vasudevan is worried these days. She is finding it difficult to arrange money for her 83-year-old mother’s monthly medical expenses. The 63-year-old retired banker was financially disciplined and had saved enough for a rainy day and a comfortable retirement life.

But it all came crashing down on September 23 last year when the Reserve Bank of India (RBI) placed the Punjab and Maharashtra Co-operative (PMC) Bank under regulatory restrictions. Roopa had parked almost half of her retirement savings in the bank and is now distraught with no solution in sight even after nine months of ordeal.

Being a retired banker from the co-operative banking sector, Roopa expected a resolution in six to nine months, but the RBI on June 19 extended the restrictions for another 6 months with withdrawal limit extended to ₹1,00,000 for the whole restriction period.

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The government, which has tried to provide a helping hand to MSMEs and individual loan takers during the lockdown by way of EMI moratorium and additional lending, hasn’t responded to the pleas of thousands of PMC depositors whose financial condition has only worsened post the lockdown.

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“Our life has become difficult with all the money struck in this bank and nobody is willing to help us. Nobody is telling what is happening clearly. The RBI is answerable since they rated the bank A+ in their audit. We now learn that some of the retired officers of RBI joined the bank after retirement even before cooling off period. We are confident there is collusion between the RBI and the bank management,” says Roopa.

Depositors of PMC bank are miffed with the Centre for not proactively resolving the crisis. They accuse the government of partisan approach especially after the swift action they took in saving Yes Bank, a private sector entity. Depositors argue that reviving PMC bank would have been much easier as it doesn’t need any money from public exchequer.

This is because, they believe that the value of the seized real estate properties belonging to the biggest defaulters HDIL and Wadhwans, is more than the deposits lying in the bank.  “The depositors of Yes Bank are large in numbers and they would have taken on the government if it had continued with restrictions, which is why the issue was resolved in 15 days,” says Sunil Bhat, a depositor.

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“In our case, they know that most depositors are old and retired and we can’t do much. PM Modi tweets and talks about everything in Mann Ki Baat, why hasn’t he said a word about us? No assurance from the Government that they will take care of us,” says 46-year-old Sunil.

Sunil, his mother and wife have accounts in the PMC Bank. He was forced to lie to his 73-year-old mother, who has been informed that everything was fine with the bank. Sunil’s family has deposits of around ₹1.5 crore in the PMC bank and he fears that his mother won’t be able to absorb the shock of her family’s entire savings getting stuck in a scam ridden bank.

“What’s our mistake? We deposited our money in an RBI-audited bank and still got cheated. We have been surviving during the lockdown with the money borrowed from our relatives. More than 30 people have died and still, the government and the RBI are not showing any urgency to solve this. We suspect the RBI has made an example out of us to bring all co-operative banks under its control,” says a distraught Sunil.

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In fact, the lackadaisical attitude of the Union Government and the RBI has caught the eye of the Delhi High Court as well. While hearing a petition filed by one of the depositors, the single judge bench asked the RBI and the Government to explain how PMC Bank and Yes Bank depositors faced different sets of circumstances.

It has asked both the parties to file an additional affidavit giving details “as to what propelled it to take action in the “public interest” to secure the interests of the depositors of Yes Bank and the reason why the UOI (Union of India) accorded sanction to the reconstruction scheme.”

The RBI, in a release on June 19, blamed the pandemic and a lengthy legal process for the delay. “Reserve Bank has been engaging with the stakeholders to explore the possibility of a resolution of the bank. However, the process has been affected due to the lockdown on account of COVID 19 and the continuing uncertainty around the pandemic. Further, the extent of the negative net worth of the bank, and the legal processes involved in recovery of bad debts also pose challenges/limitations in resolution of the bank,” said the Central Bank’s statement.

Victims of political shadowboxing?

The depositors are wondering if they have become victims of political shadowboxing. With the majority of depositors being from Maharashtra, the then Chief Minister Devendra Fadnavis had promised to “personally follow up with the centre” on the issue just before elections. But post the elections there has been no significant move by Fadnavis to get relief for the depositors.

The current regime under Uddhav Thackeray claimed that the issue was taken up with Prime Minister Narendra Modi, when he had met leaders after the formation of the “Maha Vikas Aghad” government in the state, but the government has not taken any concrete step after that.

“We wonder if the centre would have reacted differently if the BJP would have come to power in Maharashtra. Now that there is a non-BJP government there, we suspect the Centre is not interested in solving the issue. Maharashtra CM and leaders like Sharad Pawar have spoken about the issue but the state government doesn’t have much say in the matter. Only the RBI and central government can solve this,” says depositor Raghavan.

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Depositors from Bengaluru complain that Bengaluru South MP Tejasvi Surya gave them a cold handshake and ignored them though he chose to fight for the depositors of Guru Raghavendra Co-Op bank in Karnataka High Court.

This bank too has been placed under restriction by the RBI just like the PMC Bank. “He just took our petition and put it into a carton box, we tried to meet him after that but were not successful. He is perhaps proactive in Guru Raghavendra Bank case because the bank and most of its depositors are in his constituency? We may be small in numbers but some of us also live in his constituency and isn’t it his duty to take our voice to the PM and others?” asked Raghavan.

While Tejasvi Surya did not respond to the questions by The Federal, his office said the MP was busy and “focusing on other issues” currently.

As the country heads into unlock 2.0, the depositors of PMC bank have a long road ahead to unlock their money from this scam ridden co-operative bank.

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