We all deposit our cash in the bank and mainly use digital resources for our monetary needs. What if, your money gets blocked in the bank and you are unable to access your own money? Your condition will be the same if you were a Punjab & Maharashtra Cooperative Bank’s depositor. We all put our hard-earned money to make it safe, but it is all the opposite.
First, the limit was set to 1,000, then to 10,000 and now it has been set up to 25,000, It means that PMC bank’s depositors can withdraw only 25,000 during 6 months, no matter whatever amount you have in your bank account? Is it even sufficient, if you have deposited all your savings in your bank account?
The story of PMC scam is also the typical one, i.e. the bank gave a loan to a company and the company was unable to pay back the loan, but in spite of this, the bank continued to give loan to that company. The company, in this case, is HDIL. On investigation, it has been found that many of the directors are having links with BJP and one of them is a member of BJP.
Now let’s discuss how this scam happened?
The company opened 21,000 bank accounts in the bank and had taken loans in all these accounts of small amounts, the total of these loans came up to 6,500 crores. These loans were also kept out of the auditing criteria of RBI as RBI only verifies loans with huge amounts. Total deposits of PMC bank is 11,000 crores.
Until now 4 persons have been arrested, 2 from the bank and 2 from HDIL. Also, a property worth of 300 crores has been attached. But, no assurance has been given to the depositors yet. The government has put up all the responsibility upon RBI, that it will handle the matter on its own.
The fear of depositors is genuine because a similar scam happened in 2001-02 in Madhavpura Co-op bank of Gujarat, and its depositors have not received their money back till now after 17 years of the scam.
Also, deposit insurance is only worth 1 lakh is available to every depositor in India (This limit has been increased to 5 lakh from 1st April 2020), It means that if you have deposited 10 lakhs in your bank and the bank gets insolvent you will get only the amount limited to the deposit insurance i.e. 1 Lakh (5 Lakh from 1st April 2020). If we compare this limit with other countries, India has the lowest deposit insurance among other countries. For example, In Europe, it is 100,000 Euros, which equals approx. 70-80 Lakhs. In the USA, it is 250,000 Dollars, which equals around 2 crores. In my opinion, It should be updated to a minimum 50 Lakh Rupees.
What are your suggestions? What measures should the government take to secure the banking system?
I am waiting for your comments in the comments section below.
Tags : PMC bank, Crisis, fraud, banking, RBI, public deposits