New Delhi: The loan irregularities at the Punjab and Maharashtra Co-operative Bank raises questions on the roles of regulator (RBI), auditor, independent directors and bank directors, Minister of State for Finance Anurag Thakur said on Monday and added that the government will look into all the areas because eventually it is going to impact the common man.
This comes in the wake of the Reserve Bank of India ordering the PMC Bank not to do any business for six months and capped depositor withdrawals at Rs 10,000. The regulator has also appointed an administrator for the bank.
Currently the Reserve Bank of India is looking into the PMC Bank case. Recently Finance Minister Nirmala Sitharaman had said the government is watching the developments there and will see what best can be done for the affected people.
"Government will wait till there is more clarity in the matter. At this stage, the RBI is handling it. Let a comprehensive picture emerge, post that the government will have to see what best can be done so that some assurance can be given to people who are affected," she had said.
Responding to a query if RBI made a late call on decisions on PMC Bank, Thakur said: "The role of regulator, is very important at the same time role of auditors, bank officers, directors are equally important and what they have been doing for the last so many years and people responsible for this.
"The regulator (RBI) is looking into that. At this stage I would not say much. But the reports emerging on the bank in public is very shocking. It is very important and an eyeopener for the banking sector.
"Such instances should not take place. It also raises a question on various people whether it is regulator, auditor, directors and officials," he said on the sidelines after inaugurating a museum at the country's second largest bank, the Punjab National Bank.
Asked since the role of auditors will be there to investigate, will the Ministry of Corporate Affairs look into the alleged irregularities, he said: "The government will look into all the areas in the case, wherever required, because eventually it is going to impact the common man and the banking sector overall."
On a question in the wake of recurring frauds like Nirav Modi and now PMC Bank, Thakur said "an issue that keeps repetitively coming to everyone in such cases is what's the role of auditors, independent directors, bank directors, officials or regulator (RBI) then?
"After all they meet to take decisions, who are the decision makers, and what are those decisions and if something is hidden from the government and public and if not, why such frauds happen even in the knowledge of these people, this is a matter of great concern."
According to sources, of the Rs 8,880-crore loan book (as of September 19, 2019) that PMC had, more than Rs 6,500 crore or over 73 per cent of the assets are with the bankrupt real estate HDIL group only, which has been an NPA account since the past two-three years and yet the bank kept on lending to the once leading slum re-developer.
Asked if the government is looking at cutting personal income tax after slashing the corporate taxes to boost demand, Thakur said: "Modi government has already given individual tax payer's relief of upto Rs 5 lakh from Rs 2.5 lakh earlier.
"We have already brought down the corporate tax rates for the existing tax filers to 22 per cent from 30 per cent and for the new investors who start their production before 2023, it's going to be 15 per cent.
He said he is of the view that NCLT should be the last resort for banks to go for recovery.
There are many good options before that for the bankers to recover more amount and also for the other stakeholders. If everyone can sit together and work out a formulae they will get more money out of the NPA assets resolutions, Thakur said.