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

Sithara007

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Quote from: lobat999 on October 09, 2019, 10:34:10 PM

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

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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:

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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:

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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.

Murat

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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.

jaocoincrypto18

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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.

bryant.coleman

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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.

wxa7115

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Quote from: Lucius on October 09, 2019, 08:10:40 AM

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.

desticy

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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.

target

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Quote from: SummerBliss on October 11, 2019, 09:14:39 AM

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.

beerlover

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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.

SummerBliss

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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.

ene1980

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Quote from: 1Referee on October 10, 2019, 05:56:25 PM

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.

Quote from: 1Referee on October 10, 2019, 05:56:25 PM

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.

1Referee

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Quote from: ReiMomo on October 10, 2019, 01:55:30 PM

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.

aysg76

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Quote from: Hydrogen on October 09, 2019, 06:51:43 AM

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.

ReiMomo

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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.

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Quote from: NathanJB on October 09, 2019, 09:00:38 PM

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

Vishnu.Reang

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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.

coinfinger

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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.

SaShiRaJaVu

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Quote from: Zanzibet on October 09, 2019, 02:04:31 PM

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.

audaciousbeing

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Quote from: Hydrogen on October 09, 2019, 06:51:43 AM

....

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.

Lucius

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Quote from: alyssa85 on October 09, 2019, 03:21:50 PM

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.

ecnalubma

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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.

Topic: Bank Crisis Hits India, Many Accounts Wiped Out, People Left With Nothing (Read 458 times)