When we look at the Banking System of India, we know that they are facing a tough time since last few years due to various bank scams including PMC Bank Scam, ICICI-Videocon Scam and much more. They lend money to many businessmen with an intention of earning profits through interests. However, they have been defaulting the repayments which further affects the financial condition of the banks.
Recently, Karnataka Bank revealed a fraud of Rs. 107.99 crores which is about 1.74% to the Sintex industries on October 9 2020. The textile company had taken loans from a number of institutions of which Karnataka Bank was one of them. The other banks involved such as Punjab National Bank had informed the Reserve Bank of India about the fraud.
On August 20, 2020, Yes Bank was accused of investing Rs 3,700 crores between April to June 2019 in the non-convertible debentures of Dewan Housing Finance Limited. In return, they received Rs 600 crores from DHFL as loans to Morgan Credits Private Limited and DOIT Urban Ventures Private Limited. Later, it was found that the family members of the owner of DHFL owned those companies.
Bank frauds are not a recent trend, they are taking place since the last decades.
One such scam is the Punjab Maharashtra Co-operative Bank, it is a scheduled co-operative bank which operates in Gujarat, Maharashtra, Karnataka, Goa, Andhra Pradesh, New Delhi and Madhya Pradesh.
They had lent a significant amount of money to the Housing Development and Infrastructure Limited, HDIL a real estate development company and their associates on September 19, 2019.
The bank gave them almost 73% of their total credit accessibility which amounts to Rs. 8,880 crores. The concerned authorities have sealed Rs 3,500 worth assets of the company in question.
The Enforcement Directorate had ordered the Mumbai police to arrest the HDIL chief, Rakesh Wadhawan and his son, Sarang Wadhawan. The management of the bank had issued a confession letter to the Reserve Bank of India in which they had accepted giving loans without the approval of the member to the real estate company of Rs 6,500 crores.
When asked, the former Managing Director issued a statement that they had lent the money to the company as they were positive on the repayment. He also presented a plan for recovering all the dues.
In an alleged confession letter to the RBI, the bank’s suspended managing director Joy Thomas had accepted giving loans to realty developer HDIL and its related entity to the tune of Rs 6,500 crore without informing all the board members.
The PMC had allowed the real estate development company to open password-protected accounts in the bank. It was later revealed that 44 loan accounts were hidden using 21,049 fake bank accounts opened by manipulating the software of the bank.
The scam was exposed by a group of women employees working in the credit department of the bank, who later informed the Reserve Bank of India. After the exposure, the customers rushed to the bank to save their hard-earned money when they were refused to withdraw their money. However, they were given only a part of their savings.
One more such incident was the ICICI-Videocon fraud case. The CEO of ICICI, Chanda Kochhar, Venugopal Dhoot and her husband, Deepak Kochhar, the CEO of NuPower Renewables Pvt Ltd. (NRL) was arrested for cheating the ICICI bank for Rs 1,730 crores. They turned the professional space and relations into the game of chess.
They were charged with criminal misconduct, conspiring, taking gratification, cheating and pecuniary advantage. Chanda Kochhar helped Dhoot and her husband by misusing her position. She provided the money by lending loans to Videocon International and Videocon Industries and Nu Power Renewables.
These credits amounts were approved by violating the Banking Regulation Act and the credit guidelines of the RBI. According to the deal, Dhoot invested Rs 64 crores in Chanda Kocchar’s husband’s company, NRL and also sold Supreme Energy Pvt Ltd (SEPL) to a trust owned by Deepak Kocchar between 2010-2012.
From June 2009 to October 2011, ICICI lent six huge loans to Videocon Group of Industries by going against the policies. The approving committee was later charged with criminal conspiracy in 2009.
It was revealed that the very day Videocon has provided the loan, they had transferred Rs 64 crores to Deepak Kocchar’s company, NRL, which they used to buy a power plant. This resulted in Chanda Kochhar accused of taking gratification and misusing her position. Was it soo simple for a person in the higher position to sanction a loan by breaking the rules of the bank?
Later, Dhoot resigned from SEPL and transferred it to Deepak Kochhar as he had sold his shares of the trust owned by Deepak Kochhar.
All the stated loans became the non-profit assets, a liability of the bank, leading to the debasement of the organisation. This was gain fo the wrongdoers but the customers and depositors suffered significantly.
Not only these fraud cases, a few years back, owner of Gitanjali Group, Nirav Modi defrauded Punjab National Bank of Rs 11,400 crores and fled to the United Kingdom.
These businessmen are only concerned about themselves and want to earn more profits, however, they end up bankrupt and flee from the country. Not banks or business think of the common people who entrust these banks with their hard-earned money. Now more than ever, It has become imperative for the government to monitor all the transactions made by large organisations, this also calls for the political intervention in the banking system of the Country.