The Punjab and Maharashtra Cooperative (PMC) Bank had disclosed an exposure of only Rs 439.6 crore to the HDIL Group out of Rs 6,226 crore, underlying the loan was camouflaged, Parliament has been told.
The Reserve Bank of India has reported that the fraud was perpetrated by the PMC Bank by withholding and falsifying pertinent information about its exposure to HDIL. During the current inspection, PMC Bank has admitted to having a total exposure of Rs 6,226.01 crore (inclusive of interest accrued in the related accounts) as on March 31, 2019 to the HDIL group. Out of this, only Rs 439.58 crore was disclosed to the RBI and remaining Rs 5786.43 crore remained undisclosed, the Finance Ministry told Lok Sabha in a reply.
The exposure to HDIL group was camouflaged/misreported to RBI and have since been classified as NPAs by the RBI, requiring huge provisioning to be made as per RBI instructions, and this resulted in a steep deterioration in the financials of the bank, the Finance Ministry added.
It said that banking functions of cooperative banks are regulated by the RBI under the Banking Regulation Act, 1949 and the apex bank conducts a statutory inspection of Urban Cooperative Banks (UCBs) under section 35 of BR Act, 1949.
Meanwhile, based on a complaint filed by the bank against its officials and borrowers associated with the fraud/financial irregularities in the bank and manipulation of its books of accounts, the Economic Offences Wing of Maharashtra Police has started its investigations into the matter. Forensic auditors have been appointed to look into the related transactions.
The RBI has issued various circulars and guidelines relating to frauds. These include instructions relating to audit, cybersecurity, early detection and reporting etc.
The RBI has also informed that as per the provisions of Deposit Insurance & Credit Guarantee Corporation (DICGC) Act, 1961, the DICGC provides insurance for bank deposits upto Rs 1 lakh per depositor. Banks are required to maintain 1 per cent higher Capital to Risk-Weighted Assets Ratio (CRAR) than the Basel III norms framed by the Basel Committee on Banking Supervision.