PMC Forensic Audit Report by Month-End; Norms for UCBs Tightened

RBI also announced a slew of measures for better regulation of the urban cooperative banks (UCBs).

Published05 Dec 2019, 03:40 PM IST
3 min read

The forensic audit report on the scam-hit Punjab & Maharashtra Co-operative Bank is expected by the end the month, Reserve Bank of India Governor Shaktikanta Das said on Thursday, 5 December, PTI reported.

The multi-state co-operative bank has been under the RBI restriction since 23 September after it had found financial irregularities, including huge under-reporting of loans and non-performing assets to real estate developer HDIL to the tune of Rs 6,500 crore using hundreds of dummy accounts.

The central bank also sacked the board of the bank and appointed an administrator.

"There is a forensic audit which is underway. The final report of the forensic audit is expected by the end of this month," Das told reporters at the post-policy press conference.

Das said PMC, with the help of professional valuers, is also assessing the realisable value of assets mortgaged by borrowers as well the assets of the bank which have been seized by the Mumbai Police's EoW and Enforcement Directorate.

“Once we get the forensic audit and once we get the final numbers after doing a proper assessment of the realisable of the assets, a call will be taken on the further course of action.”
Shaktikanta Das, Governor, Reserve Bank of India 

RBI has also put in place a co-ordination mechanism between the PMC administrator, the EOW, ED and the RBI is also monitoring the situation on a regular basis and steps for asset monetisation, after obtaining court permission.

Recently, the RBI had informed the Bombay High Court that PMC had used special codes to hide the hundreds of dummy loan accounts of HDIL and of the 1,800 PMC employees, only about 25 could access these loans accounts.

The regulator had said these few employees used an access code to hide and restrict the visibility of these dummy accounts of the realty developer.

Slew of Measures for Urban Cooperative Banks

In the wake of the PMC Bank scam, the RBI announced a slew of measures for better regulation of the urban cooperative banks (UCBs), including exposure norms, credit repository and cyber security guidelines.

In the Statement on Developmental and Regulatory Policies, the RBI said it intends to amend norms for exposure limits for single and group or interconnected borrowers, promotion of financial inclusion and priority sector lending.

“These measures are expected to strengthen the resilience and sustainability of UCBs and protect the interest of depositors,” the depositor said, adding that an appropriate time frame will be provided for compliance with the revised norms.

"A draft circular proposing the above changes for eliciting stakeholder comments will be issued shortly," RBI said.

According to the second measure introduced, urban cooperative banks with a loan book of over Rs 500 crore will now be required to report details of their large exposures to RBI's Central Repository for Information on Large Credit.

Detailed instructions will be issued by 31 December 2019, it said.

The RBI has also prescribed a comprehensive cyber security framework for the UCBs, as a graded approach, based on their digital depth and interconnectedness with the payment systems landscape, digital products offered by them and assessment of cyber security risk.

"The framework would mandate implementation of progressively stronger security measures based on the nature, variety and scale of digital product offerings of banks," the RBI said.

(With inputs from PTI.)

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