Bank Crisis Hits India, Many Accounts Wiped Out, People Left With Nothing

[Hydrogen]

The Punjab Maharashtra Co-operative Bank (PMC), in India, has been caught cooking the books and misreporting non-preforming loans (NPL) of Mumbai-based real estate developer Housing Development and Infrastructure Ltd (HDIL). As Reuters reports,  PMC hid the bad loans with 21,000 fictitious accounts, which has spooked depositors, investors and government officials.

Reuters learned about the massive fraud through a complaint filed with the Economic Offences Wing (EOW) of Mumbai Police earlier this week, alleges that PMC concealed $616 million in NPLs.

BloombergQuint said PMC's loan book had a 73% exposure to HDIL's failed real estate dealings.

"The actual financial position of the bank was camouflaged, & the bank deceptively reflected a rosy picture of its financial parameters," said the complaint, noting that the fictitious loan accounts were not entered into the bank's core banking system - a factor key in the perpetration of a $2 billion fraud at Punjab National Bank that was uncovered in 2018, said Reuters.

The complaint says PMC's Chairman Waryam Singh and its Managing Director Joy Thomas were at the center point of the fraud. It also names HDIL's former senior executives Sarang Wadhwan and Rakesh Wadhwa, who were the recipients of the real estate loans.

As recession fears intensify in India, the PMC banking crisis has ignited the debate among government officials that the banking sector could be headed for turmoil.  

The Reserve Bank of India (RBI) took over PMC last week and has prevented the bank from new loan creation, while nearly 900,000 depositors have been informed that capital controls are being placed on their accounts for six months.

Dozens of videos have been uploaded to social media this week, detailing how depositors are being locked out of their accounts, some fear the worst, as the bank has likely failed.

One depositor said he lost all of his money in the PMC banking crisis.

Thousands of people have marched in the streets this week, demanding PMC return their savings.

Another heartbreaking moment when a woman discovers her family's savings were completely wiped out in the banking crisis.

Hundreds crowd inside one PMC bank branch, attempting to withdraw their savings, as they learn the bank failed.

CNBC TV18 reported depositors are feeling "anger and pain" as they learn capital controls have limited them to only withdrawing $100.

With a financial crisis developing, the Reserve Bank of India is scrambling to reassure the public that the banking sector isn't imploding.

https://www.zerohedge.com/markets/bank-crisis-hits-india-bank-stops-functioning-people-crying-outside-bank-branches

....


Whether people realize it, similar scenarios are playing out across the world. Banks are becoming insolvent and adopting questionable unethical policies on their depositors in an effort to cover costs. This has been an ongoing theme for a long time. Something that has not necessarily been fully addressed even after the 2008 economic crisis. Like Paul Krugman said: "kick the can down the road" (leave the real problems for someone imaginary person in the future to fix).

Unfortunate for us, while mainstream media spams us with stories about bitcoin being a bubble. There is very little coverage on banks all over the world imploding and needing to be bailed out and saved from their own mismanagement and poor decisions. This has a tendency to give people flawed opinions on the effectiveness of state imposed regulation as well as the claimed stability and reliability of traditional financial institutions like banks.

[1714131884]

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[Lucius]

It may be rather ungrateful to evaluate the state of the Indian banking system on just one case, but it is strange that this bank managed to do things like this and was able to create 21 000 fictitious accounts to hide bad business. This shows us that actually control of the central bank failed in his work, or at least it was late to prevent financial malversations.

When asked why people still keep money in banks, most say that it is still the safest way (for them). And given the attitude of the Indian government towards cryptocurrency, I think it's hard to expect people to change their minds and turn to something else, especially towards Bitcoin, which is still too complicated for most.

In my opinion, any investment is a risk, but I think that keeping money in banks at times like this is an even bigger risk. In some countries (EU) state guarantees for the funds up to a certain amount, so even if banks fail the client is insured against loss.

[hamdi]

being poor is bad but having a lot of money also causes sorrows.

best is still being master of a manual work trade and thus being able to get along at all times.

[Wexnident]

We can all silently pray for the people whom got scammed by PMC. This goes to show what are the risks that are employed when giving your money to banks. Even though this kind of situations happens, people still accept banks and they feel much safer using them. Why? It's becayse it is the most acknowledged form of cash storage(something like that, my grammer is limited sorry). This makes them turn away from the reality of improvement in which scams and lies can be avoided and the future of which is blockchain technology.

[CryptoBry]

What happened to the Punjab Maharashtra Co-operative Bank (PMC) in India can also be happening elsewhere. This can be so unfortunate as the banking sector forms one of the many critical pillars of any country's economy. Destroy the banking system and we all effectively put the whole economy on chaos and turmoil which can all lead to recession of the economy and the shrinking of the GDP. People manning the banks are not holy angels so they are under the pull of human nature and that is greed. There should have been strictly implementation of regulatory laws covering all the banks and red flags should have been reported earlier so as to avoid the things that pushed PMC to bankruptcy. The problem comes in when the government has no strong political will to mend the broken ways a bank can get into. Now, those in the government and regulatory bodies should not be wondering why some people are really clamoring for innovations and changes that they are finding in cryptocurrency.

[Sithara007]

I wouldn't call this as a major crisis. India is a country of 1.35 billion people and the number of users who got affected was a few thousands, as per the latest media reports. And most probably, the government is going to reimburse them most of the money that they have lost. I checked the major newspapers here in India and none of them even have this news in the front page.

And it looks like the government authorities have already moved in to limit the losses. Most of the accused are in police custody (Joy Thomas, Waryam Singh, Rakesh Wadhawan and Sarang Wadhawan). The authorities have also frozen assets worth ₹35 billion, which covers almost 80% of the losses made by the PMC Bank (₹43.55 billion).

[doomistake]

When asked why people still keep money in banks, most say that it is still the safest way (for them).

It is not the safest way for them, the thing is, it is the only thing they know how to store their money, in a "Safer" way. They are afraid of trying out new things like bitcoin as a way of storing their money as an investment, which is why they have no choice but to put their fiat in the bank even they know to themselves that it is risky, they are trusting the bank too much because they think that the bank will do something whenever there is going to be a problem inside the bank.

I dislike the banks because we trust them but they don't trust us, how ironic is that. They are like a selfish person who always want to take the benefits for himself.

[Kyraishi]

Is this even a surprise anymore, I already saw an article where banks ripped off their customers a week ago, it's almost like your money will never be your money...

Keeping your money in a bank was seen as safe and reliable previously, but the more I read and research it's feels like it's the complete opposite and having your money in a bank just leads to issues.

How are these people going to get their money back? It looks like PMC is a dead company now and things look dire.

[DaveWave]

Is there no bank insurance on account holders? In India banks are allowed with no deposit insurance to its customers? I don't think people should be left with nothing completely.  

Happenings like this are becoming common especially on corrupt countries where people in power and the rich collaborate each other for their own benefits. They can easily attain loans without proper procedures. Armed with the right connections and everything is possible for them.

[lobat999]

Is there no bank insurance on account holders? In India banks are allowed with no deposit insurance to its customers? I don't think people should be left with nothing completely.   

Happenings like this are becoming common especially on corrupt countries where people in power and the rich collaborate each other for their own benefits. They can easily attain loans without proper procedures. Armed with the right connections and everything is possible for them.

Most probably they have bank insurance but only offers minimal insurance with estimated amount of $1,508 which is way too low if compared to  what other banking institutions offers around the world! that is why India's deposit insurance industry is ranked among the lowest in the world! Certainly that bank will surely collapse and will go bankrupt amidst a possible bank run which would most certainly occur not to mention its tainted credibility among the banking industry.

I think this is where the benefits of transparency,immutability, etc., from blockchain technology comes into play! and in reality,this scenario is a regular occurrence among the banking industry all over the world and we were only left asking this questions: what happened to Government imposed regulations in the banking sector? I guess soon they will recognize the benefits of using blockchain technology in which that crisis could have been avoided if only they've adopted it.
 
Source: https://timesofindia.indiatimes.com/business/india-business/at-rs-1-lakh-indias-bank-deposit-insurance-lowest-in-world/articleshow/71485135.cms

[error08]

Just consider it as business bankruptcy which inflicts a financial loss to many people.
This news is exaggerating what happened in India as it just one bank not all of them, and 80% of the losses have been covered by the bank assets. That is the role of the government to make sure everyone gets what they are entitled to. This is an example of why we shouldn't saving too much money in a bank, just put enough to meet your daily needs and pay your bills, the rest of your funds invest in some assets like bitcoin.

[avikz]

I wouldn't term this particular incident as banking system failure. I am well aware of this case and I personally know many of the victims. The problem occurred because 86% of the total loan size  was given to only one company known as HDIL which went bankrupt. The loan amount was used for buying ultra luxury cars and homes by the directors of the company without using it in the business. The chairman of the bank is directly involved in this scam which lead to a bigger problem and the bank is now not capable of fulfilling their liabilities.

So it's a classic case of corruption in India and not really a banking system failure! Obviously big political influence played a big role in this which will never come to light because the rulling party is involved with it!

[The Sceptical Chymist]

Unfortunate for us, while mainstream media spams us with stories about bitcoin being a bubble.

Not that I listen to mainstream news sources, but I haven't heard any such stories these days about bitcoin being in a bubble.  If the media is writing stuff like that, they're out of touch with reality just a wee bit.  When bitcoin was surging toward $20k, it might have been true.  Right now?  Hell no.

Also, there have always been banks busted doing shady or even illegal things, and I'm not sure the situation these days is worse than 2008, nor are bank closures as frequent.  I remember back then that when I listened to Bloomberg radio, every day there were more and more banks getting shut down because of insolvency.  Maybe I ought to start listening to Bloomberg again, because I've been disconnected from the world of finance for years now. 

I wouldn't call this as a major crisis.

I wouldn't either, but tell that to the customers involved.  They're the ones feeling the pain.

[teosanru]

Even though central bank has imposed certain restrictions upon handling of the bank to ensure the safety of money of the customers but still it's pretty defaming as to how such incidents can happen when these banks are to entrusted with people's money. Moreover central bank has also placed restrictions upon the withdrawals which people can make out of their accounts. But people don't know that bank's have the power to create money by the way of just a click. Just imagine when you pay using your credit card. There is no flow of money. Technically you just say bank you will pay in 30 days and bank pays to the person on your behalf. Now if you come down to withdraw money from bank savings account you can still withdraw it and so can that person to whom you have paid. Bank generally maintain only the necessary statutory liquidity rate requirements. This is really awful

I wouldn't call this as a major crisis.

I wouldn't either, but tell that to the customers involved.  They're the ones feeling the pain.

Yeah even though it's not one of the major banks and public dealing is pretty low but still anyone who has an account here has got a hit. Moreover what's the guarantee that this cannot happen to a bigger bank?

[ivakar]

this is may be the part of global liquidity crisis. the one feds trying to fight with daily repos
maybe it is enough to cool situation inside us, but I'm quite sure it is not enough to cool it outside..
and country with usd shortage will suffer hard, as well as banks in that country..

[dothebeats]

This is a classic case of stirring the story in order to cover-up the damage dealt by the bankers in question. There are no 'banking system failure' just straight-up corruption from the big bosses and their accomplices. The reason why these banks manage to pull of such heinous and corrupt things is because the government allows them to have this freedom. Should governments be strict in banking entities, this would not happen--although let's face it, some government officials would likely join in the corruption in order to make money. Either way, money is lost, people are devastated and I think jail time isn't sufficient of a punishment to the people behind this. They just made some lives worse with what they did.

[ene1980]

And it looks like the government authorities have already moved in to limit the losses. Most of the accused are in police custody (Joy Thomas, Waryam Singh, Rakesh Wadhawan and Sarang Wadhawan). The authorities have also frozen assets worth ₹35 billion, which covers almost 80% of the losses made by the PMC Bank (₹43.55 billion).

What i do not understand is what were the authorities doing when all these issues were happening, it is a corrupted country and hence there is nothing alarming. Found the following online and it looks like they were looting in broad day light.

Two Rolls Royce cars worth nearly Rs 6 crore each and a Bentley Continental GT worth approximately Rs 2 crore were among a dozen cars seized. On Saturday the agency said it had also attached a private jet and jewelry worth Rs 60 crore.

If they are able to steal amounts like these from the bank, what about the balance sheets, they might be having links with the political system too and since the people started rioting the streets these came to light.

[shield132]

In overall people who are in government, have great wage, great apartments and what's the main subject is that they have huge influence on everything and to be fair rules that are written in overall on people, are sometimes ignored on them because of their status and connections.
So in any way there is no crisis for them, they even make money from it.
I just wanted to say that and make clear that they do nothing for our wealth and India is doing very silly decisions. They decided to ban bitcoin and everything related to it (investment, holding), they even set jail on it so such country won't succeed in economy in overall andbank crisis doesn't dissapoint me at the moment.

[Pab]

People are keeping money in banks because of no choice,because they are getting his salary via bank transfers to his accounts.Even that there is 10 mln unbanked people in USA.Just some days ago we had big 50bln repo .50 bln dollars was injected in banking system because of no liquidity.Similar was in 2007.What happen next we very well know.Last time there was 20 bln dollar Russian money laundering done by big banks from USA and EU
There is possible to add even more to that list.But banks are still sacred cows and they can always count on Central Banks help

[13abyknight]

This is really a sad and uncalled miss happening in India where the banking sector has been witnessing worse things by the day over the last couple of years. The Reserve Bank of India kind of needs to be held accountable here too as they could've prevented this if they took the right actions when signs of a scandal like this seemed likely.

Then again, giving ₹25,000 as compensation is like throwing a nickel into a beggar's bowl which already had $5000+ stolen off of. I really hope these woes end with the accused on the run being put behind bars and the rightful people getting their monies back.

[Spaffin]

This is really a sad and uncalled miss happening in India where the banking sector has been witnessing worse things by the day over the last couple of years. The Reserve Bank of India kind of needs to be held accountable here too as they could've prevented this if they took the right actions when signs of a scandal like this seemed likely.

Then again, giving ₹25,000 as compensation is like throwing a nickel into a beggar's bowl which already had $5000+ stolen off of. I really hope these woes end with the accused on the run being put behind bars and the rightful people getting their monies back.

The current situation is really very scary, because the whole world knows how people live in India and what difficulties they endure.  It seems to me that it is necessary to pay attention to all problems in India not only to international organizations, but also to the citizens of India themselves need to take the initiative.  We have already seen in many countries how people can solve problems and force their rulers to correct many mistakes and solve problems.

[Zanzibet]

To be blamed most is the India's central banks failure to put monitoring mechanisms in place. learning from this incident they ought to tighten their rules.  This is a lesson that no investment is 100% safe be it crypto or not.

[alyssa85]

It may be rather ungrateful to evaluate the state of the Indian banking system on just one case, but it is strange that this bank managed to do things like this and was able to create 21 000 fictitious accounts to hide bad business. This shows us that actually control of the central bank failed in his work, or at least it was late to prevent financial malversations.

When asked why people still keep money in banks, most say that it is still the safest way (for them). And given the attitude of the Indian government towards cryptocurrency, I think it's hard to expect people to change their minds and turn to something else, especially towards Bitcoin, which is still too complicated for most.

In my opinion, any investment is a risk, but I think that keeping money in banks at times like this is an even bigger risk. In some countries (EU) state guarantees for the funds up to a certain amount, so even if banks fail the client is insured against loss.

This stuff is not unique - Wells Fargo of the United States also got caught making ficticious accounts and they got fined $100 million and had to pay back $2.5 million to account holders who were defrauded.

The only difference between the US and India is that the American authorities crack down heavily when they can (American prosecutors can make their name and then go on to run for state Governor if they can take down a big name, so they have a big incentive to make sure these types of frauds get prosecuted).

[clickerz]

This is really a sad and uncalled miss happening in India where the banking sector has been witnessing worse things by the day over the last couple of years. The Reserve Bank of India kind of needs to be held accountable here too as they could've prevented this if they took the right actions when signs of a scandal like this seemed likely.

Then again, giving ₹25,000 as compensation is like throwing a nickel into a beggar's bowl which already had $5000+ stolen off of. I really hope these woes end with the accused on the run being put behind bars and the rightful people getting their monies back.

This is really unfortunate that the institution you trusted your money is the one who robs you.This is intentional, a clear fraud by hiding their bad loans,creating fake clients,  to paint a good record so that they can attract more investors ad depositors. Hope people high ranking officials who where involved get punish and serve in jail.

This is also the reason  why  cryptocurrencies, become popular especially to the young.

[lobat999]

To be blamed most is the India's central banks failure to put monitoring mechanisms in place. learning from this incident they ought to tighten their rules.  This is a lesson that no investment is 100% safe be it crypto or not.

Absolutely! Not only the Central Bank of India is to be blamed but I guess the Government of India and all its regulating bodies that have failed to do their part should be blamed as well!

But on the brighter side, I assume the Indian Government will further strengthen and improve their regulations and learn lessons from this incident to prevent it from ever happening again in the future or at the very least minimize the possibility of its occurrence - thus making their banking system more robust to retain the confidence of its stakeholders.

[magneto]

Whether people realize it, similar scenarios are playing out across the world. Banks are becoming insolvent and adopting questionable unethical policies on their depositors in an effort to cover costs. This has been an ongoing theme for a long time. Something that has not necessarily been fully addressed even after the 2008 economic crisis. Like Paul Krugman said: "kick the can down the road" (leave the real problems for someone imaginary person in the future to fix).

Unfortunate for us, while mainstream media spams us with stories about bitcoin being a bubble. There is very little coverage on banks all over the world imploding and needing to be bailed out and saved from their own mismanagement and poor decisions. This has a tendency to give people flawed opinions on the effectiveness of state imposed regulation as well as the claimed stability and reliability of traditional financial institutions like banks.

This does feel like some sort of sick throwback to the 2008 GFC, doesn't it?

Banks investing in high risk high return assets for the sake of giving off the appearance of profitability, while ending up with toxic assets on their balance sheets which they grossly over-report in terms of their mark-to-model values... Sound familiar yet? Hmm... I wonder what could go wrong.

People seem to feel like bank insolvency would no longer be an issue after the strengthening of regulations after the GFC, but it is still very possible and even likely in some countries. And yes, you're right in pointing out how mainstream media seem to put no emphasis on this news while grilling BTC for absolutely no reason.

[meliodas]

This is the reason why I don't fully trust the banks even outside from the India. Even though there is a lot of people that keep on saying that the banks are safer than other type of storing our money, I don't follow their advice because I know that there is a possibility for them to just completely shutdown and that is the reason why I only put at least 3-6 months total of my monthly expenses in the bank and the rest of my money are invested in assets that are liquid enough to preserve my wealth.

[NathanJB]

But why should the media be exposing how the banks are incompetent? The banks are the most powerful entity in this world. They control governments, they can also control the media more easily. News will come out of banks' shady transactions and extreme failures when they are about to explode already and they cannot contain it anymore because sooner or later the public will still know.

[Ailmand]

One the reasons why banks are avoided by some people most fraud acts or stealing in banks comes way inside from the management it self. There had been a lot of issues within banks even in our country where some remittances or even funds from personal accounts of their depositors are being credited without them knowing and what is crazy about this bank employees would even show  that withdrawals had been signed that is why no disute can be done or the most common one would be banks delaying tactics where they would say they would investigate about it. Do not trust banks with your funds.

[Sithara007]

To be blamed most is the India's central banks failure to put monitoring mechanisms in place. learning from this incident they ought to tighten their rules.  This is a lesson that no investment is 100% safe be it crypto or not.

Absolutely! Not only the Central Bank of India is to be blamed but I guess the Government of India and all its regulating bodies that have failed to do their part should be blamed as well!

But on the brighter side, I assume the Indian Government will further strengthen and improve their regulations and learn lessons from this incident to prevent it from ever happening again in the future or at the very least minimize the possibility of its occurrence - thus making their banking system more robust to retain the confidence of its stakeholders.

I don't know how you can blame the government when this scam was perpetrated by a few high ranking bank official with no links to any of the political parties. I would rather congratulate the government for acting quickly and arresting the accused before they were able to flee to safe heavens (as many of the criminals have done in the past). The government also froze the stolen assets, so that the account holders could be reimbursed for their losses.

As per the latest updates, the government has recovered around 80% of the stolen amount and this will be reimbursed to the users sometime soon. And many of the scammers are likely to forfeit their own fortunes, in return for a milder punishment. Therefore I expect the victims to be compensated in the range of 90% to 100%, and here I would be rather praising the government rather than complaining about it.

[lobat999]

Absolutely! Not only the Central Bank of India is to be blamed but I guess the Government of India and all its regulating bodies that have failed to do their part should be blamed as well!

But on the brighter side, I assume the Indian Government will further strengthen and improve their regulations and learn lessons from this incident to prevent it from ever happening again in the future or at the very least minimize the possibility of its occurrence - thus making their banking system more robust to retain the confidence of its stakeholders.

I don't know how you can blame the government when this scam was perpetrated by a few high ranking bank official with no links to any of the political parties. I would rather congratulate the government for acting quickly and arresting the accused before they were able to flee to safe heavens (as many of the criminals have done in the past). The government also froze the stolen assets, so that the account holders could be reimbursed for their losses.

I guess I'll stand by my opinion to blame the  Indian government since I believe they have the duty and obligation to protect their citizens from this kinds of frauds in the banking sector even if they are not directly linked to that fraud. But unfortunately, India's regulating bodies and other Government entities with banking jurisdiction failed to prevent this incident probably because of poor implementation of rules and regulation in accordance with it accepted banking policies and standards.

As per the latest updates, the government has recovered around 80% of the stolen amount and this will be reimbursed to the users sometime soon. And many of the scammers are likely to forfeit their own fortunes, in return for a milder punishment. Therefore I expect the victims to be compensated in the range of 90% to 100%, and here I would be rather praising the government rather than complaining about it.

Is that so? If this is true, then I must commend the Indian Government for this swift action but I doubt the depositors will be compensated by more than 90 percent since the bank had already been drained with NPL and its depositors only have limited depository insurance but not unless the Government will intervene and absorb all the banks liabilities which I also doubt will not likely to happen.

Also, maybe you could provide us links to the latest updates for reference.

[ecnalubma]

In this kind of crisis people will begin to realize how important to have full control of their financial assets.This is the disadvantage of a centralized financial system and this is happening all over the world not just in india. This century old banking system needs an overhaul, blockchain based banking could be an answer.

[Lucius]

This stuff is not unique - Wells Fargo of the United States also got caught making ficticious accounts and they got fined $100 million and had to pay back $2.5 million to account holders who were defrauded.

The only difference between the US and India is that the American authorities crack down heavily when they can (American prosecutors can make their name and then go on to run for state Governor if they can take down a big name, so they have a big incentive to make sure these types of frauds get prosecuted).

The truth is that we cannot compare the banking system in India with that of the USA, especially bank supervision when it comes to this kind of thing. But generally, when it comes to banks, there are financial malpractices in almost every country in the world. We can remember the HSBC case, one of the strongest global banks which is caught in drug money laundering and terrorist financing, but instead of being banned (which was the intent of the US judiciary) they pay $2 billion fine and continued to work as if nothing had been.

If such things can happen, it only means that the supervision is not good enough, but also that those who should be watch about such things sometimes turn their heads to the other side for financial gain. I think the penalties for such crimes are insufficient, these are mostly fines and suspended sentences that actually encourages people working in the sector to do such things.

[audaciousbeing]

....


Whether people realize it, similar scenarios are playing out across the world. Banks are becoming insolvent and adopting questionable unethical policies on their depositors in an effort to cover costs. This has been an ongoing theme for a long time. Something that has not necessarily been fully addressed even after the 2008 economic crisis. Like Paul Krugman said: "kick the can down the road" (leave the real problems for someone imaginary person in the future to fix).

Unfortunate for us, while mainstream media spams us with stories about bitcoin being a bubble. There is very little coverage on banks all over the world imploding and needing to be bailed out and saved from their own mismanagement and poor decisions. This has a tendency to give people flawed opinions on the effectiveness of state imposed regulation as well as the claimed stability and reliability of traditional financial institutions like banks.

I don't think anyone could have been put any better. Banks all over the world are gradually facing difficult situations and its something that calls for concern. For me, I think most times its due to pressure from several quarters such as the central banks, the government agencies, bankers committee and even the general public as they have an expectation of them and the moment their reality does support such expected positions, they tend to come up with a creative way to ensure that is happening.

In a sane society, banks should not go under and if that would happen, there would have been a signalling effect because of the role the industry occupies in the economy. In this case, it is the fault of the central bank for them to have a situation like this in their hands for not seeing through the creative accounting that is being done by the management of the bank and eventually they have to take along the money of their customers who have trust them with their resources. Anyway, its a bank, government will always come through in other to salvage the economy.

[SaShiRaJaVu]

To be blamed most is the India's central banks failure to put monitoring mechanisms in place. learning from this incident they ought to tighten their rules.  This is a lesson that no investment is 100% safe be it crypto or not.

There is a big difference here, these things happen when you trust the centralized banking system where any individual decision can ruin your life savings and we have seen in this specific bank where the upper personalities responsible for good banking took advantage and gambled with the common man's money. If you trust bitcoin there is nothing to be worried but if there is a centralized coin then you need to worry.

[coinfinger]

This is good for them, I think they left things that they are meant to have tackled to avoid this, and was busy going against cryptocurrency which if they had adopted, I am sure would not have given rise to such thing, and at least, it would have saved 50 percent of lost fund. Right now, my money is divided into 50:50, one is saved in fiat in the bank and one is in my cryptocurrency wallet, both bitcoin and usdt.

Imagine that I was an Indian citizen, and among those that lost bank money, would I not have been able with something now through my cryptocurrency wallet, which there is even tendency that I could get the lost one back after bitcoin pumps to the last all-time high, but I wonder how they really reason, and they just want to keep the whole system to themselves when they know that they really cannot protect it.

[Vishnu.Reang]

From what I have heard, PMC is only the tip of the iceberg. People are not realizing that the real issue is with HDIL (Housing Development and Infrastructure Ltd). PMC Bank loaned around $1 billion to HDIL and it looks as if that amount is gone. And PMC is not the only bank that had exposure to HDIL. Other banks had also loaned huge amounts to HDIL.

[LeGaulois]

But why should the media be exposing how the banks are incompetent? The banks are the most powerful entity in this world. They control governments, they can also control the media more easily. News will come out of banks' shady transactions and extreme failures when they are about to explode already and they cannot contain it anymore because sooner or later the public will still know.

Banks are the most powerful? A lot of banks are in agony and on respiratory assistance from the Central Banks. Many don't sucess in the stress test. For years now, they're are fighting to reduce their cost to operate.  HSCB alone is in the process of firing 10k people.
There are some banks that now charge people to deposit money! Yes, you heard it right, you want to deposit the money you pay!

Banks are weak, more than before 2008! Statistics show than banks won't survive more than ~8 months if a big crisis happens, like back in 1929
 with the great crash

[ReiMomo]

I feel so sad about what happen to them the reason why I really don't trust bank because of that. We thought that our money is safe but look at what happens? All their money is gone so I would prefer to just invest in bitcoin rather than saving money on the bank that you are not sure if it's really secure.

Time will come that Bitcoin will the main currency and not a currency that regulated by our government, all things make decentralized and we have the freedom to store our valuable assets safe.

[aysg76]

Unfortunate for us, while mainstream media spams us with stories about bitcoin being a bubble. There is very little coverage on banks all over the world imploding and needing to be bailed out and saved from their own mismanagement and poor decisions. This has a tendency to give people flawed opinions on the effectiveness of state imposed regulation as well as the claimed stability and reliability of traditional financial institutions like banks.

The bank you talking about isn't nationalized bank. It is just a co-operative bank which functions very differently from commercialized bank. Co-operative banks generally lend and take deposits from their members only. So co-operative banks are not as secured as commercialized banks. I read somewhere that Indian Finance Minister has assured the clients of the bank that they will get their money back so situation is in control I guess. Also, there is enough media coverage about this in India so it is wrong to say that media doesn't expose deficiencies of banks. I remember reading online about the bank called PNB operating in India which was scammed by some Indian businessman and it was big election issue in India.

[1Referee]

I feel so sad about what happen to them the reason why I really don't trust bank because of that. We thought that our money is safe but look at what happens? All their money is gone so I would prefer to just invest in bitcoin rather than saving money on the bank that you are not sure if it's really secure.

Despite how little trust there is left in the banking system, banks remain the best option to store your fiat wealth.

I personally haven't ever had a problem with my bank account, neither did I ever fear that anything would happen to my money. In most western countries the oversight on banks (especially publicly traded banks) is so tight that on a retail client level there isn't much to fear about. It gives people the peace of mind they're looking for.

As much as I would love to say that people should dump all their money in Bitcoin, it doesn't work like that. There is volatility risk, risk of security negligence that could lead to the loss of funds, etc. Diversification (fiat, Bitcoin, Gold, etc) is smart. Also make sure to use not just one bank, but several to reduce the risks even further. I personally use 3 banks where I have a third of my savings with each of them.

[ene1980]

Despite how little trust there is left in the banking system, banks remain the best option to store your fiat wealth.

For a common citizen banking is the safest option when storing your wealth and the risk comes when you choose the banks you are planning to store your wealth, i will not select any private banks to deposit my money but would rather look for banks controlled by the central bank and i will only trust Bankitalia.

I personally haven't ever had a problem with my bank account, neither did I ever fear that anything would happen to my money. In most western countries the oversight on banks (especially publicly traded banks) is so tight that on a retail client level there isn't much to fear about. It gives people the peace of mind they're looking for.

These banking issues happened with private banks in the US during recession and this case is in India, these things happen in third world countries even if government regulated and controlled banks but not in my part of the world.

[SummerBliss]

So from this we can conculde that nowadays banks are aslo not safe to keep your money as scams are happening in every feild of work.So who are to we blame in this?Rich took loans from banks and misrepresent their financial statememts to fool banks and then this whole thing turns out te be scam.And poor people fails to improve their financial conditions under these cases.So that is why btc and blockchain technology needs to be adopted to create a safe and secure environmemt to transact online transactions with transparency.

[beerlover]

Economy has been in shambles all around the world, India is just another leg of this, soon it will be all over the world and all the big major nations will face it as well, what do you think those huge nations like UK and USA do to make that much money? They scam the low money requirements in lower nations and now those nations are in economical trouble and require more money to keep surviving the prices of manufacturing will go up and that is when the people in those big nations will start to feel it as well.

India is literally the biggest source of cheap labor for talented people, they are not like Chinese where they make almost free shirts, they are IT people who understand from many aspects, they will want more money soon and then Silicon Valley will have to face a harsh reality that no matter how rich they are, they can't continue skimping on employee costs.

[target]

So from this we can conculde that nowadays banks are aslo not safe to keep your money as scams are happening in every feild of work.So who are to we blame in this?Rich took loans from banks and misrepresent their financial statememts to fool banks and then this whole thing turns out te be scam.And poor people fails to improve their financial conditions under these cases.So that is why btc and blockchain technology needs to be adopted to create a safe and secure environmemt to transact online transactions with transparency.

Even from the start though but everyone has no option but to put their money in banks as its more dangerous to keep bringing a sum of cash anywhere you go. Nothing will even make the government of India change their stance about cryptocurrency, this is just one bank anyway. This country is not left behind when it comes to technology though, they are better than their neighbors here in Asia.

[desticy]

In India, strange things are happening that can adversely affect the market.
I think it is connected with the following events. In India, strange things are happening that can adversely affect the market.
I think this is primarily due to the onset of the financial crisis. Obviously, Indian banks worked on this principle like everyone else.
It seems that the crisis will begin with India. A crisis in the banking systems is inevitable.

[wxa7115]

It may be rather ungrateful to evaluate the state of the Indian banking system on just one case, but it is strange that this bank managed to do things like this and was able to create 21 000 fictitious accounts to hide bad business. This shows us that actually control of the central bank failed in his work, or at least it was late to prevent financial malversations.

When asked why people still keep money in banks, most say that it is still the safest way (for them). And given the attitude of the Indian government towards cryptocurrency, I think it's hard to expect people to change their minds and turn to something else, especially towards Bitcoin, which is still too complicated for most.

In my opinion, any investment is a risk, but I think that keeping money in banks at times like this is an even bigger risk. In some countries (EU) state guarantees for the funds up to a certain amount, so even if banks fail the client is insured against loss.

But what happens when this becomes common place? Who is going to guarantee the government is going to pay? And even if they do they most likely will print the money they need, this in return will cause inflation and will not only weaken the purchasing power of the money of those saving in those banks but they will weaken the purchasing power of everyone.

People should be looking for a way to protect their savings, I know it is difficult since we will never know when the crisis will appear but trying to do it when the crisis is already here is a mistake, I have chosen bitcoin but I have no problems with those that choose gold in order to achieve that very same goal.

[bryant.coleman]

Contrary to what the OP had posted, it looks like the depositors will be reimbursed for most of their losses. In India, they have a mechanism called the Deposit Insurance and Credit Guarantee Corporation (DICGC), which acts as an insurance policy for every Indian national having a bank account. This scheme covers each and every bank account (savings, current.etc) in India.

However, there is a catch. As with any insurance policy, there is an exposure limit. And it is capped at ₹100,000. Now this may sound very minuscule for people in developed nations, but for the Indians, it is a big amount. And some 80% to 90% of all the account holders of the PMC Bank have deposits below this threshold. Multiple accounts by the same person will be considered as a single account.

[jaocoincrypto18]

This shows that it is also unwise to keep all of our money in the bank as its just proven not safe too that even it just a one bank involved but i believe that all banks in India will be affected. Hopefully their bank insurance policy can be able to return the money of their clients so that the confident of the people to the banks will stay.

[Murat]

Don't take it very seriously, It's happening around the world, the conventional banking system is getting in difficulties because of engaging in the online-based system, in recent time, A lot of occurrences we have seen and many people lost their valuable saving and investment though it must provide by the bank. Not only in India, but also in the developed countries, we are the witness of many system failures, not only that but also a country's central bank faced a huge security crisis by hacking their system, also we know a lot of banks are facing a liquidity problem in recent time, So people start getting worried on the current context and its high time cryptocurrency platform should be flourished out by introducing some good project.

[Sithara007]

Also, maybe you could provide us links to the latest updates for reference.

You can check these:

https://www.moneycontrol.com/news/business/companies/pmc-bank-crisis-hdil-enforcement-directorate-sarang-rakesh-wadhavan-asset-seizure-4526681.html

The Enforcement Directorate (ED) today provisionally attached properties worth Rs 3,000 crore belonging to Rakesh and Sarang Wadhavan, promoters of bankrupt real estate firm HDIL.

The plots are located in prime areas such as Vasai, Virar and Palghar and totals 2100 acres. A conservative estimate is that the net worth of this real estate stands at ₹30 billion (around $400 million). Earlier, property and assets worth ₹600 million were seized by the ED. Check these:

The ED's action, which is based on the investigation of the Mumbai Police's Economic Offences Wing (EoW), comes soon after it also initiated provisional attachment of the Wadhawans’ 22-room beachside Alibaug bungalow that stands on a 2.5-acre property, two private jets -- a Falcon 200 and a Bombardier Challenger -- and jewellery worth Rs 60 crore.

And here is the statement from ED saying that the seized assets account for over 80% of the amount owed:

The agency had also frozen five bank accounts of Waryam Singh, the former chairperson of the PMC Bank, who was named in the first information reports (FIRs) of the ED and EoW. So far, the value of the assets attached total up to Rs 3,500 crore, or more than 80 percent of the money it owes PMC Bank, even as, a source said, the ED is confident of exceeding the total amount owed.

Actually rather than complaining about the government, we should be praising them. If this had happened during the UPA rule, then the criminals would have escaped to UK or any other tax heaven with all their wealth.