Wadhawans and PMC – The Saga of a Corporate Quid Pro Quo.
As news reports of scams pour in one after the other, it is becoming clear that credit administration in India’s public sector banks is a near-sham. With the Punjab & Maharashtra Cooperative (PMC) Bank adding to another crisis in the banking sector in India, an economic fallout seems quite within our reach. The 5 pager confession letter of the now suspended MD of PMC Bank Joy Thomas shows how the 2 organizations helped each other survive for over 3 decades. The roots of the PMC saga date back to 1986 when the Wadhawans threw a life jacket for the drowning PMC Bank. The brothers’ duo Rajesh and Rakesh Wadhawan infused a capital of 13 lakhs and bailed out the bank of the negative net worth position. In another turn of events, during the 2004 cooperative banks’ crisis, the bank found itself trying hard to keep head above water, as the customers panicked to withdraw their deposits. The company’s liquidity position was deeply bruised with these moments of crisis. This was ...