Punjab & Maharashtra Co-operative Bank (PMC Bank), a multi-state co-operative bank, is facing a crisis after the Reserve Bank of India discovered that over 70% of PMC's loan book of 88 billion rupees was tied to just one borrower group, the bankrupt real estate company HDIL. In an attempt to hide this large exposure, PMC Bank had used "dummy accounts" and other methods over several years. The RBI has restricted deposit withdrawals from PMC Bank to 1000 rupees, though it was later revised to 10,000 rupees, and authorities have arrested the promoters of HDIL while attaching their properties worth 3500 crores. The future of thousands

1. PMC BANK CRISIS
FINANCE AND INVESTMENT CLUB
IIM ROHTAK

2. CO-OPERATIVE BANK AND RBI
 Cooperative bank is an institution established on the cooperative basis and dealing in ordinary banking
business.
 Like other banks, the cooperative banks are founded by collecting funds through shares, accept
deposits and grant loans.
 Scheduled Banks in India refer to those banks which have been included in the Second Schedule
of Reserve Bank of India Act, 1934. RBI in turn includes only those banks in this Schedule which satisfy
the criteria laid down vide section 42(6)(a) of the said Act. Banks not under this Schedule are called Non-
Scheduled Banks
 Every Scheduled bank enjoys two types of principal facilities: it becomes eligible for debts/loans at
the bank rate from the RBI; and, it automatically acquires the membership of clearing house.
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3. PMC BANK
Punjab & Maharashtra Co-operative Bank is a Multi-State Scheduled State Co-operative Bank with its area of operation in the
States of Maharashtra, Delhi, Karnataka ,Goa, Gujarat ,Andhra Pradesh and Madhya Pradesh
February 13, 1984 as a single branch Bank and now is a Scheduled State Co-operative Banks.
In a span of 35 years, the Bank has a wide network of 137 branches across six states.
The Bank has been awarded with 'Best Bank award for the year 2018' in the category of Rs.2000 cr & above deposit by the
Brihan Mumbai Nagari Sahakari Banks Association Ltd. for consecutively 2 times.
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4. THE CRISIS
 Reserve Bank of India l banned depositors from taking out more than 1,000 rupees ($14) for six months
without offering any explanation ( Revised to 10,000 after agitation and discussions)
 Press Trust of India reported that as much as 73% of PMC’s 88 billion rupee loan book – or almost $920
million – was tied to just one borrower group: Housing Development and Infrastructure Ltd.
 Housing Development and Infrastructure Ltd Mumbai-based shantytown developer that’s facing
bankruptcy proceedings
 Entire burden has been placed at the door of depositors, who are innocent victims.
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5. ANNUAL REPORT
 NPA ratio shown as 2.19 in
2018-19 and 1.05 in 2017-18
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6. MORE DETAILS FROM JOY THOMAS
Thomas said he stopped reporting the same by 2008
1020 crores by 2011 which was more than 50% of the total advances 2000 crores
2015- Normal RBI checks didn’t have deeper arms hence they were hiding these bad debts
PMC Bank used “dummy accounts” and other methods to hide its oversized loans to Housing Development & Infrastructure Ltd (HDIL) when RBI had stricter checks starting 2017
Fear of losses as NPA and fear of losing reputation
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7. AUDITORS
In the past eight years, PMC had three statutory auditors -- Lakdawal & Co (FY19 and FY18);
Ashok Jayesh & Associates (FY17, FY15, and FY11) and DB Ketkar & Co (FY14 and FY12).
The shallow auditing of the books of PMC by its statutory auditors was done as the 'bank was
growing',
Ladkawala & Co and its chartered account (CA) partner KP Lakdawala (Membership No.035633)
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8. DEVELOPMENTS
 1986 Late Rajesh Kumar Wadhwan supported when the bank was about to closure
 Economic offences wing pf Mumbai Police arrested Rakesh Wadhwan and his son Sarang Wadhwan,
director of HDIL
 The EOW has provisionally attached Wadhwans’ properties worth 3500 crores
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9. REFERENCES
 Source:
//economictimes.indiatimes.com/articleshow/71373106.cms?utm_source=contentofinterest&utm_mediu
m=text&utm_campaign=cppst
 //economictimes.indiatimes.com/articleshow/71405786.cms?utm_source=contentofinterest&utm_mediu
m=text&utm_campaign=cppst
 https://www.pmcbank.com/english/home.aspx
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10. TIMELINE OF PMC CRISIS
1984 as a
single branch
Bank
1986-
Financial
Crisis and
founder of
HDIL helped
them to
recover
2004-
Financial
Crisis and
HDIL
grouped
helped them
to recover
2008- PMC
started
hiding the
loans given
to HDIL from
RBI
2011- 1026
crore out of
2000 total
loan book is
given to
HDIL
2015- RBI
was not
checking in
depth hence
they were
hiding
2017-
Splitted the
loan into
several
“Dummy
accounts” to
hide the loan
exposure
2019-
September
21- MD
wrote letter
to RBI
regarding
fear of no
recovery
2019-
September
23- RBI
limited to
1000
withdrawal
limit
2019-
September
27- RBI
increased
limit to
10000
2019-
October 3 ,
Arrested the
Wadhwan
Group MD
and took
over assets of
3500 crores
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11. THANK YOU
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