It started like any other bank story. A local cooperative bank, loyal depositors, and regular branches in middle-class neighbourhoods. Punjab and Maharashtra Co-operative Bank, or PMC Bank, was a name people trusted.
Not a flashy private bank, not a slow-moving PSU—but just the right kind of mix. Safe. Familiar.
Or so it seemed.
Until one day, it wasn’t.
“Madam, you can’t withdraw more than ₹1,000.”
That one sentence brought entire families to their knees. Outside PMC Bank branches, people queued up, crying, protesting, begging to access their own money.
The RBI had stepped in and capped withdrawals to a mere ₹1,000 initially.
Why?
Because the bank had hidden one of the biggest loan scams in the history of Indian banking under everyone’s nose.
“Mummy, humare paise gaye kya?”
That was a real question asked by a school-going boy to his mother, who stood outside a PMC Bank branch in Sion, Mumbai.
The mother, a widow, had kept her husband’s death compensation money there, about ₹7 lakhs. That morning, the RBI had just capped withdrawals to ₹1,000 per account.
She had no words for her son. Just silence. And tears.
The HDIL Nexus: A Dangerous Obsession
The entire bank had seemingly fallen in love with one company—HDIL (Housing Development and Infrastructure Limited), owned by the Wadhawan family.
How much did PMC lend to HDIL?
A staggering ₹6,117.93 crore. That’s more than 70% of the entire loan book of the bank.
Not just that, over 80% of the loans to HDIL were given without proper collateral.
It was like giving away your house keys to someone who’s already defaulted on rent elsewhere.
And this wasn’t a one-man mistake. This was an orchestrated cover-up.
The Cover-Up That Could Rival a Crime Thriller
In one of the forensic audits conducted by Grant Thornton, it was revealed that PMC Bank was faking income entries to show profits.
In 2012–13, they inflated profits by ₹61 crore.
By 2017–18, that inflated number grew to ₹780 crore. They were showing unpaid interest from HDIL as “income” just to keep the books looking clean.
And how did they hide all this?
By opening over 21,000 Ghost Accounts
If this sounds like a Bollywood script, you’re not far off.
To camouflage the defaults, PMC officials opened 21,000 fictitious loan accounts in the system.
These weren’t customers—they were nothing more than entries to split and hide HDIL’s huge exposure.
According to the forensic audit conducted by Grant Thornton, income was being falsely booked every year to show profits.
In 2012-13, the fake interest income shown was ₹61.83 crore. By 2017-18, this figure had snowballed to ₹780 crore.
When the RBI eventually unearthed the truth in 2019, it acted fast.
But for thousands of depositors, it was already too late.
The Man Who Knew Everything
At the center of it all was Joy Thomas, the Managing Director of PMC Bank. He later admitted that they kept giving loans to HDIL even when they were officially declared defaulters.
Why?
Because if they stopped, HDIL wouldn’t be able to repay the old loans. So PMC kept lending, kept rolling over old loans, and kept hiding it all in those fake accounts.
It was like using a new credit card to pay off your old one—except on a multi-thousand-crore scale.
The Collapse and the Chaos
When the RBI stepped in September 2019, it was already too late.
The public outrage was instant. Retirees who had parked their life savings couldn’t withdraw a few thousand rupees for medical emergencies.
Businesses crumbled.
Protests erupted across Mumbai.
Eventually, the Enforcement Directorate (ED) and Economic Offences Wing (EOW) got involved. Massive 33,000-page chargesheets were filed. The Wadhawans were arrested. Joy Thomas too.
ED went on to attach:
- ₹52.9 crore worth land parcels in Sindhudurg
- Shares worth ₹233 crore linked to HDIL
- Commercial assets and offices
But money wasn’t the only thing lost. Trust was shattered. And that’s harder to recover.
The Scam in Numbers
- ₹6,117 crore: Total exposure to HDIL
- 21,049: Fake accounts used to hide NPAs
- ₹11,617 crore: Deposits affected
- 137 branches: Across India, which became epicenters of panic
- Multiple deaths: Elderly depositors died of heart attacks, stress, and in some tragic cases, suicide
Depositors: The Forgotten Victims
Even now, years later, many depositors are still waiting to get their full money back. RBI eventually merged PMC with Unity Small Finance Bank, but that didn’t bring closure. The scars remain.
Outside the Vakola branch in Santacruz, an old man once whispered to a reporter, “Beta, I saved all my life. I never gambled, invested in shares. I just trusted the bank. And now, I feel like a fool.”
He isn’t alone.
What Went Wrong?
- Regulatory Blind Spot: Cooperative banks fall under a dual regulatory system—the RBI for banking activities and the state governments for management. That creates room for manipulation.
- Auditor Complicity: Repeatedly, audits missed or ignored red flags.
- No Whistleblower Culture: For years, nobody spoke up. Either out of fear, or ignorance, or both.
What We Should Learn From This
The PMC Bank scam isn’t just about corporate fraud or regulatory failure. It’s about how unchecked power, blind trust, and institutional silence can lead to the downfall of something as fundamental as a bank.
It shows that fraud doesn’t always wear a hoodie in a dark room; sometimes, it wears a tie and sits behind a branch manager’s desk.
This case should remind every Indian depositor to ask questions, to stay informed, and not assume that cooperative means safe by default.
Final Thoughts
The PMC Bank scam isn’t just about numbers or news cycles. It’s a story of what happens when greed finds silence, when oversight is a formality, and when real people become collateral damage.
If you’re someone who believes in our financial system—or wants to guard against its failures—this story matters.
Stay alert. Ask questions. Trust, but verify.
And always remember: a passbook tells you the balance, but not always the truth behind it.
