Deepak Parekh on PMC Bank crisis: No system in place to safeguard common man’s savings

Amid the ongoing PMC Bank crisis, HDFC Chairman Deepak Parekh said that there is no system in place to safeguard the hard-earned savings of an honest common man. Even as the financial system provides for corporate loan waivers and write-offs, there is nothing to stop misuse of savings of the common man, news agency PTI also reported citing Deepak Parekh as saying at an event. “It seems brutally unfair that we have allowed a system of loan waivers and write-offs every now and again, but yet we do not have a robust enough financial system to protect the honest common man’s savings,” the news agency also reported the veteran banker as saying.

It comes as the RBI put a slew of restrictions on the bank for six months on September 23. The restirction came as the RBI found that the exposure of the co-operative bank to real estate developer HDIL was in too much in excess of what the regulations require and also as the lender hid the NPAs of HDIL. The withdrawal limit for account holders was also kept at Rs 1,000 for six months, which was later raised to Rs 10,000. The regulator also dismissed the board and suspended Thomas. Rakesh and Sarang Wadhawan, the promoters of Housing Development and Infrastructure Ltd (HDIL), along with bank’s former chairman Waryam Singh, were arrested over alleged irregularities.

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On Thursday, Finance Minister Nirmala Sitharaman met the irate account holders of the PMC Bank and assured them that a solution would be reached soon by the RBI. Finance Minister also said that the concerned secretaries of the ministry have been asked to study in detail the shortcomings and look at ways, if necessary, in which the respective Acts need to be amended.