A letter from the whistleblower of PMC Bank points to the initial warnings given to the RBI, despite which the scam emerged on a large scale. related to PMC Bank New information has emerged, following the discovery of financial irregularities and under-reporting of bad loans in the aftermath of the 2019 scam and restrictions imposed by the Reserve Bank of India (RBI).
According to a special report by monecontrol, the information is known about a letter sent in early January 2011, in which a whistleblower had cautioned the RBI about financial irregularities in the bank.
According to information released by Moneycontrol, on January 28, 2011, an employee of PMC Bank sent a letter in the name of A Udgata to the Chief General Manager-in-Charge of RBI in Urban Banks Department. The letter highlighted the bank’s dealings with two other entities – Housing Development Infrastructure Limited (HDIL) and Dewan Housing Finance Corporation (DHFL). The letter highlighted the relationship between the top management of PMC Bank and the two companies controlled by the Wadhawans.
The whistleblower also asked for gross under-reporting of non-profitable assets (NPA), entry of fake deposits, rigging of loan accounts and unearthing perpetuity of loans.
According to the whistleblower’s letter, many of the top borrowers were related to bank directors and even top bank officials. Due to this, the bank officials were asked to deliberately manipulate the accounts so as to facilitate loans by issuing fresh loans to create newly owned firms and to close the earlier NPAs to these companies.
The caveat of this whole sordid story is that all of this could easily have been prevented if it hadn’t been for a series of unfortunate events. For one, the RBI actually recognized the letter and accepted the same. On March 7, 2011, the RBI sent its letter to the CEO of PMC Bank, in which it asked him to investigate the issue and provide feedback to the regulator. However, the then CEO Joy Thomas himself was at the center of this debacle. After a thorough investigation, it is revealed that Thomas had previously converted to Islam and lived a double life under the alias of Junaid Khan in an attempt to marry his assistant. It was also revealed that he had gifted her nine flats in Pune. Following this discovery, he was arrested by the Mumbai Police in October 2019.
Despite all the early warning bells, it couldn’t have gone any other way as the scandal took root from the inside out, starting all the way to the top brass.
As far as audit is concerned, Lakdawala & Co., Statutory auditors For PMC, the bank had given it an audit classification of ‘A’ rating. This is the highest rating given, indicating that everything was going smoothly in the bank. This comes at a time when there was apparently large scale account rigging and when fraud was going on across the institution. This puts a question mark on the role of auditors in the scam itself.
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