Document Fragment View

Matching Fragments

22. In para 12, there is reference to the extensive report of the sixth respondent-bank as on 31st March, 2018. Para 12 and 13 of this affidavit are relevant and they read as under :-

JVS-PS & MMS, PA Judgment-WPL.3030.19+3.doc "12. RBI Inspection Report with respect to financial position as on March 31,2018
a) Since transaction testing is not done in the RBI inspection, and the bank submitted fraudulently manipulated data to RBI for sample checks, the sample of accounts picked for inspection did not contain undisclosed HDIL related accounts. The disclosed HDIL related accounts were seen and majority of them were assessed as NPAs. Further, non-monitoring of end use of funds despite instructions to this effect as contained in paragraphs 4.1-4.3 of Master Circulars on Advances and conflict of interest of Shir Waryam Singh as Chairman of PMC bank and as a former director of HDIL group was also commented upon in the report along with the attempt by the bank to show disclosed accounts of HDIL group as standard by sanction of new loans to close/regularise the old NPA accounts in non-adherence to para 2.2.1 (ii) of RBI Master Circular (MC) dated July 1, 2015 on IRAC norms. Consequently, the assessed NPAs of the bank were significantly higher than the reported NPAs.

25. It is in these circumstances that the RBI acted on a complaint from a senior official of P&MC Bank, Mumbai alleging that the bank has sanctioned a large credit facility to HDIL Group in gross violation of prudent banking practices. It has manipulated data/ information submitted to RBI in this respect and also confessions of the Managing Director of the bank to many of the alleged irregularities. Then, the inspection of the bank was taken up on priority basis. The preliminary findings on this inspection revealed serious financial irregularities and the precarious condition of the bank. It is in these circumstances that the RBI says that it issued the impugned directives. The rationale behind the same is to protect the interest of the bank JVS-PS & MMS, PA Judgment-WPL.3030.19+3.doc and its depositors. The directions were necessary to avoid further damage to the depositors, prevent alienation of the assets of the bank and to provide an opportunity to rectify the irregularities and improve its financial position and to prevent preferential payments. All this is aimed to sub-serve public interest in addition to the interest of the bank and its depositors. The directives are thus supported on the touchstone of the wording and language of Section 35A of the Act of 1949. At the same time, the Reserve Bank of India says that it is sympathetic towards the hardship faced by the depositors and from time to time has relaxed the limits placed on withdrawals. The bank would require further time to complete the process.