related to banking and insurance

1. Presentation
ANIKA CHAUHAN 1090
RAVI YADAV 1058
NISHITA JAIN 1235
SUMAN KUMAR 1198
<7 FEBRUARY >

2. Punjab and Maharashtra
co-operative bank scam
• PMC bank was founded in 1984
• PMC is a multi state scheduled co-operative bank
with its area of operation in Maharashtra , Delhi,
Karnataka, Goa , Gujrat , Andhra Pradesh and
Madhya Pradesh.
• PMC Bank expanded to 137 branches in span of 35
years
• Its customers include small business , housing
societies and institutions.

3. NATURE
 The Enforcement Directorate has filed
a money laundering case in the PMC
Bank scam
 Alleged irregularities in certain loan
accounts.
 Loans given to financially stressed real
estate player Housing Development &
Infrastructure (HDIL) are at the center
of the investigation.

4. What
happened?
• According to an FIR filed, HDIL promoters allegedly colluded with
the bank management to draw loans from the bank’s Bhandup
Branch.
• The bank officials did not classify these loan as NPAs, despite non-
payments.

5. What
happened?
• Reports estimate the bank’s overall exposure to the HDIL group
at around Rs 6500 crore(over 73%) of the bank’s advances.
• The bank allegedly created fictitious accounts of companies
which borrowed small sums of money , and created fake reports
to hide from regulatory supervision . The bank software was
also tampered to conceal those accounts

6. WHY THIS SCAM DID NOT
COME TO NOTICE OF THE
RBI
1.Dormant accounts shown
2.Underreporting of NPAs:
non-performing asset which is a term used
in finance to describe a loan or advance
that borrowers haven’t been able to repay,
causing financial problem for the lenders.
3.Only selected accounts shown

7. HDIL
• HOUSING
DEVELOPMENT
INFRASTRUCTURE
COMPANY
LOAN
• NO MONEY TO
PAY BACK
• LOAN FROM
COOPERATIVE
BANK
4TIMES
• MORE THAN THE
PERRMISSIBLE
AMOUNT
NPAS
• MOST OF THE
DEBTS
CONVERTED INTO
NPAs

8. How this scam
comes in RBI
EYES?
WHISTLEBLOWER
Joy Thomas MD of PMC
wrote an open letter of
confession to RBI in
2019 . He feared there
was no way of recovery.

9. MAIN REASON FOR THE SCAM
HIGHLIGHTS
 Dual regulation state Government &
RBI
 Board of directors elected by the
members of the cooperative (political
influence)
 As per the cooperative societies act
 Limited reach less profitability
(localized)

10. According to
the research
INTERNATIONAL RESEARCH JOURNAL OF Modernization in
Engineering Technology and Science
Volume:04/issue:10/oct-2022
Swain and Pani in 2016 in study on frauds in
Indian Banking : Aspect , Reasons ,Trend Analysis
and Suggestive Measures have said that the
frauds in the recent years have increased in
Indian Banking .According to him, some of the
main reasons for the bank frauds are negligence
by concerned officers , lack of sincerity ,
irresponsible behavior, and knowledge among
bank employees, Non-compliance of KYC
guidelines as prescribed by RBI, increasing work
pressure on staff can lead to bank frauds.

11. The
regulatory
Cycle of
Fraud
New
technology
or Financial
innovation
New
loopholes
Fraud
New rules
to plug
loopholes

12.  After collapsing of PMC ,entire burden was
placed on the door of innocent depositors.
Many suicides and heart attacks were
reported in the country when the scam came
to light.
 RBI is now more stringent towards Urban
Cooperative Banks (UCBs)to safeguard the
interest of depositors.
 The Apex Bank asked UCBs to replace the
existing system of e-mail reporting at the
branch.
 In addition to this , Central Bank asked them to
constitute a Board of Management (BOM) as
per the guidelines.
ANALYSIS

13. According to
the banking
regulation act
2020(amended)a single entity
lending capacity 15% of a
bank’s total capital account
and for a group of companies
the limits is 20%
The scamsters believe that when bank sanctions them loans , the
amount received is now there asset bit they forget that this hard-
earned money of common man . Such fraudulent activities cripple
the economic security of the democracies like India. The book
describes a huge profile of serious frauds, their modus operandi
and their deep impact on economic institutions.

14. Thank you
QUESTIONS?