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Old 17th October 2019, 17:53   #46
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Originally Posted by san2 View Post
But how will NSDL respond to this issue when the savings account linked to the account itself is not active.
I've never had to do this myself. But, if I were to hazard a guess, an application to change the bank account linked to your demat account should take care of this situation.

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Originally Posted by Urban_Nomad View Post
What's the benefit banking with these "small" establishments?
The benefits are - tax evasion. Due to lax/non existent regulations these "banks" do not have to report depositors' balance, interest etc. to authorities. And I would think depositors do not have to link their PAN to their accounts either.
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Old 17th October 2019, 18:03   #47
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Frankly I didn't even know there was a bank called PMC bank (and I'm usually well versed with gk), at first I thought Pune municipal corporation has a bank. I've always avoided opening a bank account with any of the fringe banks - a nationalised one will always be a preference. Why? Simply because a large nationalised bank has deep enough assets not to go bust. A good example? PNB, even after Nirav modi, is still quite healthy despite a shaky last few quarters.
Always plonk your cash with the well known ones.
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Old 17th October 2019, 18:13   #48
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Originally Posted by rovingeye View Post

The benefits are - tax evasion. Due to lax/non existent regulations these "banks" do not have to report depositors' balance, interest etc. to authorities. And I would think depositors do not have to link their PAN to their accounts either.
No, every bank account has to meet KYC and linkage with PAN is a must. I hope you will cite some reputed sources to prove your statements since I totally disagree with your assertions.
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Old 17th October 2019, 18:54   #49
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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No, every bank account has to meet KYC and linkage with PAN is a must. I hope you will cite some reputed sources to prove your statements since I totally disagree with your assertions.
I was under the impression that a PAN linkage is mandatory for accounts that have above 50K balance as well as while doing transactions that are above 50K in value. From what I've read so far, these are the rules that were gamed regularly at coop banks.

Here's a link that talks about it - https://indiaforensic.com/certificat...ey-laundering/
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Old 17th October 2019, 19:02   #50
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Originally Posted by rovingeye View Post
I was under the impression that a PAN linkage is mandatory for accounts that have above 50K balance as well as while doing transactions that are above 50K in value. From what I've read so far, these are the rules that were gamed regularly at coop banks.

Here's a link that talks about it - https://indiaforensic.com/certificat...ey-laundering/
The link you posted talks about fraudulent issuance of demand drafts and have nothing to do with opening a bank account. See this link from Saraswat cooperative bank for a list of docs required to open a regular savings https://www.saraswatbank.com/Assets/...2020.08.19.pdf

KYC is a must, however there have been frauds at various banks including private sector banks, psu banks etc where unscrupulous employees have flouted the rules.
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Old 17th October 2019, 19:24   #51
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Originally Posted by 2000rpm View Post
I think the rot is deeper than anyone is declaring. There are so many frauds and junk deals which Indian Businessmen, Banks and Politicians have cooked up at the cost of Indian common man's, white, post tax income.

No one is able to understand who to catch and what to do and how to resolve this. YesBank, PMC, India Bulls, all seem to have a very suspicious operational record. Not to mention huge regulatory gaps in sectors like telecom.

Apart from a few directors and employees, everyone else is completely left happily.

Same goes with all tax that we pay. Where is the government P&L? Where is the transparency?

I know that this a borderline political statement, but I don't think the current administrators have a clue of whats happening in the economy. The ridiculous statements like movie collections is baffling!

Whatsapp forward received which completely resonated with me
  • People who have deposited money in banks are worried
  • People who have cash stored at houses are worried
  • People who have invested in Real Estate are worried
  • People who have invested in stocks are worried

Basically only a select few are gaining in the whole economic crisis which has been built up over the years.
Keep money in bank and the bank may disappear. All you get is Rs 1 Lac max. Keep money in house and the notes may get demonetized. We have seen it all. Not a very pleasant situation to be in.

We Indians have centuries of civilization and are not something that did sprout yesterday. Still, so much of corruption in every walk of life is despicable !!

The rot seems to be deep too. New shocking scandals of corruption are coming out every month. Using the word 'cleanup' would be a misnomer in this system. Are most of the businessmen, crooks? Or, is it that only crooks are into running business in India? There is an unholy nexus between such shady business and politics too.

When its institutions fail, the country eventually fail. Right now, there is nothing to write home about our banks, police, universities, courts, RTOs, educational institutions, politics, businesses and frighteningly even audit firms who vet those business accounts .. The list is long!!

Deepak Parekh is spot on. Crores of rupees are being written off on both corporate borrowings and agricultural loans. But, when it comes to common man who pay taxes, the deal is always unfair:

https://www.business-standard.com/ar...1100050_1.html

Last edited by B103 : 17th October 2019 at 19:35.
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Old 17th October 2019, 19:42   #52
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Originally Posted by Urban_Nomad View Post
Just curious - Why do people (I don't mean poor farmers living in some unheard of village) put their money in these banks when you have big names like HDFC or our very own SBI who can cater to them? What's the benefit banking with these "small" establishments?
There used to be a phrase "Swiss banks of Kerala" (no disrespect to any person from there). The reason behind is quite simple, co-operative banks operate partly under regulations of state government.
This allows state governments to relax KYC norms. Many states have started to behave properly but Kerala and few north eastern states have no rules of KYC for such entities nor will they likely create strict KYC requirement.

The larger question about where and which form to keep your savings/earnings.
I think we should look at assets classes that have survived few war and economic meltdowns.

Cash is absolutely no-no in the era of fiat currency.
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Old 17th October 2019, 21:35   #53
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Originally Posted by CarJunki View Post
There used to be a phrase "Swiss banks of Kerala" (no disrespect to any person from there). The reason behind is quite simple, co-operative banks operate partly under regulations of state government.
This allows state governments to relax KYC norms. Many states have started to behave properly but Kerala and few north eastern states have no rules of KYC for such entities nor will they likely create strict KYC requirement.
Well, that isn't completely true. District cooperative banks in Kerala are to be merged into a new Kerala Bank run by government under RBI regulations. Approved just a week back.
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Old 17th October 2019, 22:29   #54
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

From my experience, PSU and Private banks are a little too strict and adamant at times whereas Co-operative banks are a little easy on senior citizens. To give an example, when my Dad retired, he closed his account and gave up a locker as it was too far from his house, he wanted to get a locker which was more accessible, he tried a lot with Kotak Mahindra, HDFC, Bank of Maharashtra etc. some rejected him right away citing his age and other factors (SBI's Manager was blunt enough to tell that he would not contribute to us 'that' much), others asked him to invest a lot of money (upwards of 5 lakh minimum either through FDs + SIPs etc; Kotak Mahindra ) which was impossible. Finally, he got one at a co-operative bank nearby at a reasonable 'deal', he has it despite knowing the risks. Maybe that is the reason why most of the affected are senior citizens, I don't know.

I think this was a bubble about to burst, and its good that its happening sooner than later.
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Old 18th October 2019, 07:12   #55
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Many important points raised in this thread. Having seen the financial sector closely, here are my two cents:
- Why do people keep money in cooperative banks over regular banks: Simple, because they offer a higher interest rate. What we need to understand is that there are no free lunches. If someone is offering a higher return, you take that with a higher risk as well. Absolutely no reason why government should repay depositors who have lost money. Yes, all assets of the people who perpetrated this fraud should be liquidated to repay depositors, but there will be some haircut.
- Insurance on bank deposits: Yes, it remains a measly 1L for now and it is high time this is increased to at least 5 L if not more. Maybe this should be increased to even 10 L. The only challenge is that it will increase the insurance cost for banks which might lead to lower interest rates. What if this was de-regulated making banks free to decide how much insurance they want to keep. Will people prefer a 2 % lower interest rate for a bank with higher insurance?
- Loan waivers for businessmen - This is factually incorrect. Don't think there has been a single loan waiver for any business throughout the past few decades. Yes, there have been loan waivers for farmers, but over a period of time, governments have become better at doing this for poor, small farmers instead of the big, rich ones. There was an attempt to eliminate this requirement through crop insurance, but we are far from having a well functioning crop insurance scheme. Maybe in another decade we won't need loan waivers for failed crops as well, but till then, there will always be some form of government support for the poorer sections
- Where should people park money: Saving bank accounts are not intended for wealth creation. Their are much better investment tools for that, all with their own risks. Interest rates are a monetary tool with the authorities to smoothen peaks and troughs in economic growth. Currently with the slowing economy, government would prefer if you would spend your money than keep it in the bank so that their is more economic growth, which is the reason for decade (or more) low interest rates. At the same time, even the inflation rate is low. Interest rates and inflation can't move in different directions!!
Lastly, almost all cooperative banks are politically controlled, something which can be figured out by basic due diligence. While the government might still give some bail out to depositors, and maybe it should, as citizens we ought to do our due diligence as well while parting with our hard earned money.
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Old 18th October 2019, 08:36   #56
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

And now the probe finds out Rs. 10.5 crores of cash missing from PMC bank. Further allegations on the bank's former managing director Joy Thomas:

https://timesofindia.indiatimes.com/...w/71640680.cms
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Old 18th October 2019, 09:03   #57
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

Since we are on the topic, can someone (with adequate depth in investing) suggest a good portfolio mix for people with 1. High Risk Appetite 2. Moderate Risk Appetite and 3. Low Risk appetite.

Most of the common junta knows FDs, Gold and Mutual Funds (Thanks to the high budget TV ads) only. Some of the other instruments like Debt Funds, Liquid funds etc are not very well understood.

Someone I was discussing on the same topic with, also suggested Diamonds as a good investment option! (Thankfully my wife wasnt there to hear that! :P)
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Old 18th October 2019, 09:40   #58
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

There are two things
One is people who easily put their money in smaller banks and even private schemes (ponzi too) for higher returns. Unfortunate thing is mostly poor people get swayed away by these.

Other is given the unreasonable returns, the govt agencies dont look into them. They only come into investigate when the promoters run away or cheating has already happened.

There is no oversight even on non-banking private investment companies. So banks will never be on the radar of our agencies pre-emptively.

As it happens in our country where people are expected clean up environment and do other things voluntarily, people need to be careful.
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Old 18th October 2019, 10:45   #59
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

There's a reason why cooperative banks or small rural banks continue to be popular, see how ordinary people are treated at the branches. These folks are not well versed with mobile and need assistance with their transactions. The large banks especially psu ones don't have instructions in the regional language and their staff are unbearable and mostly rude, smaller banks make the users comfortable.

Banks that are the stock market darlings are not customer friendly and their services are affordable to a tiny sliver of the population. They don't have their branches in rural areas and lower income neighborhoods. The large private banks will only allow an account if you can maintain a 5 figure minimum balance, 6 figures if you want any branch service.

Someone mentioned that PSU banks haven't lost depositor money, that's because they were bailed out by the rest of us with our taxes. Regarding business men being bailed out, that's routine, it's called settlement, only the rich and connected get an offer.

Farmers get waivers because their income is controlled by the government, legal requirement to sell in one place where buyers collude to bring down prices, delayed payments, the list is endless. The year prices go up, government destroys your chances of making money with imports and export restrictions.
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Old 18th October 2019, 13:14   #60
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Default Re: PMC Bank: How bank closures & scams affect common men. Why is the protection only up to Rs 1 lak

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Well, that isn't completely true. District cooperative banks in Kerala are to be merged into a new Kerala Bank run by government under RBI regulations. Approved just a week back.
Well the ground reality is still same as of today.
Future situation based on last weeks decision may vary.
District level co-operative banks are only one part of the game.

A co-operative bank can be created by any group having 21 or more people.
In effect the Act governing co-operative societies are not changing, thus nothing prevents new swiss banks from starting.
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