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The PMC Crisis Is A Wake-Up Call For Every Bank Account Holder

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The recent incident regarding the failure of the Punjab And Maharashtra Cooperative (PMC) bank has once again shown the ugly face of the Indian Banking System (IBS). It has shattered the belief of lakhs of people who deposit their hard-earned money in the banks to keep it safe and secure. But, it has also unmasked how the bank regulators including the Reserve Bank of India (RBI) and the National Bank For Agriculture And Rural Development (NABARD), the internal auditors, and the statutory auditors are not serious and vigilant, and go about business with their eyes closed.

Alicia Tuovila, in an article in, defines statutory audit as “A legally required review of the accuracy of a company’s or government’s financial statements and records. The purpose of a statutory audit is to determine whether an organisation provides a fair and accurate representation of its financial position by examining information such as bank balances, bookkeeping records, and financial transactions.”

There is a saying “Saamp ko nahin, Saamp ki Maa ko mariye jo anginat Saamp paida karti hai.” (Don’t kill the snake, but kill the mother of snakes which gives birth to hundreds of snakes.)

The above-mentioned auditing and checking authorities, responsible for curbing the birth of ‘snakes’ in the IBS, should be kicked off with a hard hit. If they can’t even notice or smell the condition of the internal health of the banks during their off-site and on-site inspection and audit period, then what kind of surveillance are they conducting?

PMC Bank, a cooperative bank operating in seven states with 137 branches, having a deposit of ₹11,617 crores, a loan portfolio of ₹8,383 crores, net profit of ₹99.69 crores and declared Non-Performing Assets (NPA) of mere 3.76% in its balance sheet dated March 31, 2019. What a glorious picture the bank was painting!

Satish Bate/Hindustan Times via Getty Images

Then, what were the reasons behind its sudden collapse? Keeping aside the rules and regulations, distorting all bars and codes, the bank had reportedly lent a major portion of its loan portfolio, nearly 70% of total advancement, to a single entity HDIL (a real estate development company), which had gone bad. The RBI failed to identify the violation of rules by the PMC bank. Why?

PMC bank’s collapse is not the first such incident in India’s banking sector. Nirav Modi and Mehul Choksi allegedly organised a fraud amounting to ₹1,3570 crores to Punjab National Bank (PNB), and Vijay Mallya eloped after giving a jolt to the tune of ₹9,000 crores.

During the financial year 2018-2019, around 6,801 fraud cases involving an amount of ₹71,500 crores have been detected in Indian banks, and this shows only the detected cases, there may be some higher number of cases that are still waiting to see the light of day.

India Today, on September 8, 2019, reported that during the first quarter (April to June) of this fiscal year of 2019-2020, frauds worth ₹32,000 crores have rattled 18 Public Sector Banks or government banks. An RTI answered by the RBI revealed that 2,480 fraud cases defrauding the amount of ₹31,898.63 crores have come under the limelight.

According to the RTI reply, around 1,197 cases of cheating involving ₹12,012.77 crores were detected in the State Bank of India (SBI) in the first quarter. Allahabad Bank with 381 cases amounting to ₹2,855.46 crores got the second position. The Punjab National Bank, despite having a deep wound caused by the fraud of ₹13,000 crores in February 2018 by Nirav Modi came in third with fraud amounting to ₹2,526.55 crores during these three months of this year.

Other public sector banks are also not far behind, and they also play a major role in keeping the ‘fraud-train’ running at nearly the same speed.

What Safety For Public Money In Indian Banks?

The  BJP government, led by PM Modi, in 2016 made the public deposit their hard-earned life savings in banks by imposing  ‘note-bandi‘ (demonetisation), which kept the earnings of the people on stake without making arrangements to secure and guarantee the entire deposit. Presently, the deposits of a person up to the maximum limit of one lakh Rupees in a bank are guaranteed by DICGC (Deposit Insurance and Credit Guarantee Corporation)

The DICGC was set up with a mission to contribute to financial stability by securing public confidence in the banking system through provisions of deposit insurance, particularly for the benefit of the small depositors.

Banks covered by Deposit Insurance Scheme are:

(I) All commercial banks including the branches of foreign banks functioning in India, Local Area Banks, and Regional Rural Banks.

(II) Co-operative Banks-All eligible co-operative banks as defined in Section 2(gg) of the DICGC Act.

What Does The RBI State About The DICGC’s Role? 

The Reserve bank of India, under their frequently asked questions regarding the role of DICGC, state that:

In the event of a bank failure, DICGC protects bank deposits that are payable in India.

The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits.

(i)  Deposits of foreign Governments.

(ii) Deposits of Central/State Governments.

(iii) Inter-bank deposits.

(iv) Deposits of the State Land Development Banks with the State co-operative bank.

(v) Any amount due on account of any deposit received outside India.

(vi) Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India.

On what the maximum deposit amount is that us insured by the DICGC, the website says that, “Each depositor in a bank is insured up to a maximum of ₹1,00,000 (Rupees One Lakh) for both principal and interest amount held by him in the same capacity and same right as on the date of liquidation/cancellation of bank’s  licence or the date on which the scheme of amalgamation/merger/reconstruction comes into force.

Never Put All Your Eggs In A Single Basket

Elderly retired persons or the present working employees keep their funds in banks to give a security cover to their future life, and farmers and businessmen also have their savings/sale proceeds or working funds in their bank accounts for their day-to-day needs. Also, the government has made such harsh rules and regulations which stop the public from keeping cash in their (white) pockets.

So, people are forced to keep money in banks. But when the public’s money is not safe even in government banks, and no security cover from the banks or the government has been provided to the depositors beyond ₹1 lakh per bank (not per branch), where should the people go? Such types of restrictions and insecure environments lead to unaccounted money and a chaotic situation.

Image Credit: Getty Images

Keeping in mind all these consequences, I feel that the public should not keep more than ₹1 lakh with a single bank. If a person keeps their money in different branches of a single bank, even then, the total of all their deposits in all the branches are counted as one account. So, there will be no security coverage from the DICGC for more than ₹1 lakh deposit even in scattered accounts in the same bank. In the present scenario, maybe the public should  follow the thumb rule ‘Never  put your all eggs in a single basket.’

Keep your deposits in different banks and not in different branches of a single bank. However, this is not an example of good governance, and the government should come forward to frame rules for securing hundred percent earnings of its citizens.

Featured Image Credit: Getty Images
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An ambassador and trained facilitator under Eco Femme (a social enterprise working towards menstrual health in south India), Sanjina is also an active member of the MHM Collective- India and Menstrual Health Alliance- India. She has conducted Menstrual Health sessions in multiple government schools adopted by Rotary District 3240 as part of their WinS project in rural Bengal. She has also delivered training of trainers on SRHR, gender, sexuality and Menstruation for Tomorrow’s Foundation, Vikramshila Education Resource Society, Nirdhan trust and Micro Finance, Tollygunj Women In Need, Paint It Red in Kolkata.

Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

Read more about his campaign.

Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

Read more about her campaign.

MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Read more about her campaign. 

A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Find out more about the campaign here.

A native of Bhagalpur district – Bihar, Shalini Jha believes in equal rights for all genders and wants to work for a gender-equal and just society. In the past she’s had a year-long association as a community leader with Haiyya: Organise for Action’s Health Over Stigma campaign. She’s pursuing a Master’s in Literature with Ambedkar University, Delhi and as an MHM Fellow with YKA, recently launched ‘Project अल्हड़ (Alharh)’.

She says, “Bihar is ranked the lowest in India’s SDG Index 2019 for India. Hygienic and comfortable menstruation is a basic human right and sustainable development cannot be ensured if menstruators are deprived of their basic rights.” Project अल्हड़ (Alharh) aims to create a robust sensitised community in Bhagalpur to collectively spread awareness, break the taboo, debunk myths and initiate fearless conversations around menstruation. The campaign aims to reach at least 6000 adolescent girls from government and private schools in Baghalpur district in 2020.

Read more about the campaign here.

A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

The Transmen-ses campaign aims to tackle the issue of silence and disregard for trans men’s menstruation needs, by mobilising gender sensitive health professionals and gender neutral restrooms in Lucknow.

Read more about the campaign here.

A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

Find out more about her campaign here.

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A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

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