They used these accounts to suck out nearly Rs 6500 crore, a mind-boggling 73% of the total loan book of the ill-fated bank.
This robbery took place right under the noses of RBI and the auditors. How?
The 44 Wadhawan accounts were “masked” by 21,000 – yes, get this, twenty-one thousand – fictitious accounts, many in the names of dead depositors. Allegedly, the bank allowed overdraft draw downs, with the cash travelling via hawala (laundering) channels to Dubai.
The tainted money was “washed back” clean into PMC accounts as deposits.
While loans were given to the Wadhawans in the hidden-but-real ledgers, the fake loan accounts of 21,000 depositors were sent in the Advanced Master Indent to RBI. That’s “masking”, got it?
Now listen to the podcast for the rest of the story!
Host: Raghav Bahl
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[00:00:00] Rise Above The Din, Unbox The News With Me, Raghav Behl Raghav Behl These iconic lines penned by Shariah for Gaman, the film that came in 1978. Now these capture the pathos of these four unfortunate deaths that you've just seen about.
[00:01:09] They capture the pathos of these four deaths in Mumbai and that goes happened in the fourth week following the PMC Bank Scam or tragedy. Shameful to Promise Rs 6,500 crore which is a mind boggling 73% of the total loan book of the ill-fated bank.
[00:02:04] Now this robbery took place right under the noses of RBI and the auditors. How? Well, the 44 Vadaavan accounts were quote unquote masked. They were masked by 21,000. Now get this right 21,000 fictitious accounts and many of these were in the names of already dead depositors.
[00:02:29] Now allegedly the bank allowed overdraft drawdowns with the cash then travelling via Hvala or laundering channels all the way to Dubai and then this tainted money was washed back clean into PMC accounts as deposits.
[00:02:48] While loans were given to the Vadaavans, the money went to the Vadaavans and these accounts were the hidden but real ledgers. But the fake loan accounts of 21,000 almost several of them dead depositors were sent in the advanced master indent to the Reserve Bank of India.
[00:03:09] Now that is what is masking. I guess you get it now. You know what happened next was even more tragic. Now PMC's stunned depositors were told they could withdraw a maximum of Rs. 1,000 over 6 months. Now that's it. One piffling thousand over 6 months.
[00:03:36] You know quite obviously there was a very justified hysteria and anger that got out of control and therefore the hapless regulator had to increase the limit to 10,000 and then they increased to 25,000 and now it stands at Rs. 40,000. I now ask a simple question.
[00:03:57] Pray I would like to ask the officer who passed this astonishingly inexplicable order of a maximum withdrawal of Rs. 1,000 over 6 months. I asked why sir did you not pass a simple order saying allowed to withdraw 100% of your cash up to a maximum of Rs. 1,000,000.
[00:04:23] Why do I say that? Because with a deposit insurance of Rs. 1,000,000 per aggregate account such an order would have perhaps allowed you know over 90% of depositors to get their entire money out of the bank
[00:04:37] without causing even a penny's loss to the exchequer because everything would have been recouped from the insurance company. Let me give you a little bit more context here.
[00:04:50] India's deposit guarantee rule of 1 lakh per depositor was decreed in 1993 and that's you know over a quarter of a century ago. It's unfortunately remained unchanged since then even as the economy has grown in decadal multiples and inflation has denuded the real value of cash.
[00:05:13] Now if we had just inflation indexed this 1 lakh rupee deposit insurance that would have made it what 15 lakhs, 20 lakhs today and if we had further indexed it to GDP multiples that would have brought this figure close to perhaps 1 crore rupee
[00:05:32] and that would have benchmarked us with the best in the world. Remember China guarantees up to 81,000 US dollars per account. Even a tiny financially troubled bankrupt country like Greece protects each depositor for euro 100,000 which is almost 75-80 lakh rupees
[00:05:54] but a 5 trillion dollars in the making India still does a measly 1 lakh rupee. You know what that is in US dollars? 1,400 US dollars. That's all we guarantee per depositor. Frankly it's shameful.
[00:06:10] Now see the contrast between the power of positive governance versus the cancer of you know ban this, ban that kind of policies that our regulators usually trot out.
[00:06:22] In one you could have given each PMC depositor the ability to withdraw his or her entire cash up to almost 50 lakh rupees plus without causing a pennies loss because everything would have been recouped from the insurance company.
[00:06:40] But in the other, in this ban, this ban that category you passed an unconscionable order restricting people to 1,000 rupees in 6 months and therefore unfortunately people like Sanjay Gulati, Fatomal Punjabi, Dr. Lijlani and Murlidhar Dharra died.
[00:07:04] And if you want to listen to this in Hindi, then go to our Hindi-Quint YouTube channel and you will find this video in Hindi as well. And of course you must not forget to like, share and subscribe to our YouTube channel right now.