PMC Bank Scam: 'It is very scary that anyone can fool RBI'

Amid protests by Punjab and Maharashtra Cooperative PMC Bank depositors the Reserve Bank of India RBI on Tuesday filed an affidavit before the Bombay High Court saying it has been relaxing withdrawal limits for depositors progressively The court which has been hearing a number of petitions filed by depositors said that it cannot interfere with regard to requests for releasing more funds or a change in withdrawal limits imposed by the RBIIn a detailed affidavit the Central bank has revealed the entire modus operandi of the fraud in the PMC bank According to RBIs affidavit the bank had indulged in camouflaging accounts with the help of a software to keep certain accounts off the recordThe affidavit states that the bank had migrated to Finnacle Core Banking Solution CBS from April 13 2015 from Omni as its CBS On both systems a method was adopted to camouflage material data on NPAs The bank had assigned certain access codes to the accounts belonging to HDIL and its group entities which were used for assigning restricted visibility Less than 25 users out of the 1800 staff could access these loan accounts While running the script for system identification of NPA the bank had deliberately excluded these accounts the affidavit stated As a result all the stressed HDIL Group Accounts were omitted from a systemgenerated report on NPA accountsThe affidavit further states that the banks MIS software Opine had a script for generating a list of newlysanctioneddisbursed accounts The undisclosed loan accounts were also excluded from this list This irregularity was also not commented upon by the Concurrent Auditors of the banks Sion Branch where these undisclosed accounts were parked though a concurrent audit of the branch took place every month it readsIn other words these accounts had been excluded from various systemgenerated reports relied upon by RBI inspectorsIn the affidavit the RBI has denied all allegations against RBI officials of being party to the conspiracyPMC Bank depositors protesting at Azad MaidanPMC bank accounts were audited at many levels ndash internal concurrent and by the statutory auditors for the bank it said The last annual statutory audit of PMC took place on March 31Expert speakVishwas Utagi a banking expert however told midday that it is only the RBI that could detect the SWIFT operation and IT which both are under their control The RBI is equally accountable for such banking frauds I dont know what their job is if they never know what is happening in the banking system They only know when its reported to them In the Punjab National Bank fraud case the money was transferred to Nirav Modi through SWIFT operation which is universally accepted but it wasnt reflected in the core banking whereas your NEFT or RTGS transactions reflect immediately Utagi said adding It is very scary that anyone can fool RBI This is a total failure of the RBI It must develop expertise in offsite surveillance of the bank There should also be an inquiry Its high time that RBIs accountability must be questionedOther claims made by RBIUndisclosed loans sanctionedThe RBI also said in its affidavit that the undisclosed loan accounts to HIDIL group were sanctioned and renewed with bank MD Joy Thomas approval This sanction was not recorded in the Minutes of Loans Committee Recovery Committee which constitute vital sources of information for inspectionFalsification of offsite returns submitted to the RBIThe bank had submitted false information in the returns on single partygroup exposures filed through offsite surveillance system OSS to the RBI by not disclosing large advances relating to the HDIL group which constituted its biggest exposureFalsification of informationRBI uses indent for gathering information from banks prior to proceeding on inspection as per usual procedure In one such format for master data on advances information of all the outstanding loan accounts of the bank was called forThe outstanding amount of each loan account was added and it was found that the grand total was tallying with outstanding loans and advances up to R745749 crore as on March 31 2018 While excluding the undisclosed HDILrelated accounts and other 20 undisclosed loan accounts the bank replaced these accounts by adding 21049 fictitious loan accounts in the master data so that the summation of the outstanding balance of all the entities tallied with the balance sheet figure of banks loan portfolio Rs 745749 crore25No of employees with access to HDIL accountsCatch up on all the latest Mumbai news crime news current affairs and also a complete guide on Mumbai from food to things to do and events across the city here Also download the new midday Android and iOS apps to get latest updates