The fraud that Cost Billions

The Punjab and Maharashtra Cooperative Bank (PMC) has been accused of a fraud of Rs 6500 crores. It took 6 officials, 21,049 fake accounts and misreported data for around six to seven years. The bank lent 70% of its loans to a real estate company called Housing development and infrastructure limited (HDIL). This is illegal and it is surprising that the auditors were unaware. This fraud has lead to a loss of atleast 43.55 billion rupees. The chairmain of PMC, Waryam Singh and the managing director Joy Thomas are amongst the bank official’s accused of criminal breach of trust, forgery and falsification of records. Even Sarang Wadhwan and Rakesh Wadhwan, the former senior executives of HDIL were accused of wrong doings as they benefited from the fraud. On Thurday they were arrested by a special investigation team of the economic offences wing(EOW). Properties worth Rs. 3,500 crore belonging to HDIL have been frozen(can’t be sold) by EOW.

Meanwhile the Reserve Bank of India(RBI) is trying to help those who have their accounts in this bank. Earlier it allowed people to withdraw upto Rs10,000 and now they have pushed the limit to 25,000 Rs. The central bank also said, “With the above relaxation more than 70% of depositors of the bank will be able to withdraw their entire account balance. The RBI is monitoring the position of the bank and will continue to take neccassary steps in the interest of the depositors.”

Why are banking frauds so common in India? Tell us your views on this in the comments below…

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