PMC Bank amalgamation scheme is a mockery of justice

The scheme, approved and notified by the central government on the eve of the country’s 73rd Republic Day at the behest of the Reserve Bank of India (RBI), goes against and attacks everything considered sacred by the Indian public. The root of the building upon which the banking sector in India is built: trust in banks, in particular, the regulator, the RBI.

Perhaps, for the first time in recent memory (the Madhavpura Mercantile Co-operative Bank was the last in the early 2000s) bank depositors are being asked to suffer for bank failure; The responsibility of which lies not only on the bank management, but also on the Banking Supervisor, RBI. The latter may point to the difficulty in the supervision of co-operative banks, given the dual control of the RBI and the Registrar of Co-operative Societies (of the state government in the case of single-state co-operative societies and of the central registrar of co-operative societies in the case of multi-state ) cooperative).

And yes, the dual structure (reformed by Parliament in September 2020) limited the ability of the RBI to ensure appropriate remedial action. But it doesn’t eliminate it completely. If, as it happens now, the PMC Bank management in connivance with the management of Housing Development and Infrastructure Limited (HDIL) (now under investigation for fraud) and it was excessive exposure to the latter that was undone, then what Shouldn’t the RBI have woken up (cautious depositors) earlier?

Remember, RBI has consistently refused to accept its long-standing demand to make its inspection reports public (so that depositors can know whether their deposits are safe or not) as such information gives confidence in the banking system. may be less. While this may be justified in a scenario where the RBI ensured that a depositor does not lose his money, it falls flat in the new scenario where the bank’s failure to meet the charges levied on the bank to the depositors under the RBI Act Called to take a hit. To protect the interest of depositors.

Remember, PMC is featured in the second schedule of RBI. The inclusion here is an indication that the RBI is satisfied that the affairs of the bank are not being conducted in a manner ‘prejudicial to the interests of the depositors’. So PMC depositors had nothing to fear; Until the September 2019 bombings, when the RBI announced a moratorium.

Also remember, PMC is not the first scheduled bank to collapse. In the last few years, we have seen the collapse of Lakshmi Vilas Bank (an old private sector bank) as well as Yes Bank (a new private sector bank). However, what differs from the other two in the case of PMC Bank is that while the RBI was quick to come to the rescue of the depositors of these banks – its press release announcing the moratorium of Lakshmi Vilas Bank assured the depositors That they will not lose deposits – PMC depositors have been left in the lurch.