The affidavit states that the bank had migrated to 'Finnacle' Core Banking Solution (CBS) from April 13, 2015 from 'Omni' as its CBS. "On both systems, a method was adopted to camouflage material data on NPAs. The bank had assigned certain access codes to the accounts belonging to HDIL and its group entities which were used for assigning restricted visibility. Less than 25 users (out of the 1,800 staff) could access these loan accounts. While running the script for system identification of NPA, the bank had deliberately excluded these accounts," the affidavit stated. As a result, all the stressed HDIL Group Accounts were omitted from a system-generated report on NPA accounts.

The affidavit further states that the bank's MIS software 'Opine' had a script for generating a list of newly-sanctioned/disbursed accounts. "The undisclosed loan accounts were also excluded from this list. This irregularity was also not commented upon by the Concurrent Auditors of the bank's Sion Branch where these undisclosed accounts were parked, though a concurrent audit of the branch took place every month," it reads.

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In other words, these accounts had been excluded from various system-generated reports relied upon by RBI inspectors.

In the affidavit, the RBI has denied all allegations against RBI officials of being party to the conspiracy.

PMC Bank depositors protesting at Azad Maidan

PMC bank accounts were audited at many levels – internal, concurrent and by the statutory auditors for the bank, it said. The last annual statutory audit of PMC took place on March 31.

Expert speak

Vishwas Utagi, a banking expert, however, told mid-day that it is only the RBI that could detect the SWIFT operation and IT, which both are under their control. "The RBI is equally accountable for such banking frauds. I don't know what their job is if they never know what is happening in the banking system? They only know when it's reported to them. In the Punjab National Bank fraud case, the money was transferred to Nirav Modi through SWIFT operation which is universally accepted but it wasn't reflected in the core banking, whereas your NEFT or RTGS transactions reflect immediately," Utagi said, adding, "It is very scary that anyone can fool RBI. This is a total failure of the RBI. It must develop expertise in off-site surveillance of the bank. There should also be an inquiry. It's high time that RBI's accountability must be questioned."

Other claims made by RBI

Undisclosed loans sanctioned

The RBI also said in its affidavit that the undisclosed loan accounts to HIDIL group were sanctioned and renewed with bank MD Joy Thomas' approval. This sanction was not recorded in the Minutes of Loans Committee, Recovery Committee, which constitute vital sources of information for inspection.

Falsification of offsite returns submitted to the RBI

The bank had submitted false information in the returns on single party/group exposures filed through offsite surveillance system (OSS) to the RBI by not disclosing large advances relating to the HDIL group which constituted its biggest exposure.

Falsification of information

RBI uses indent for gathering information from banks prior to proceeding on inspection as per usual procedure. In one such format for master data on advances, information of all the outstanding loan accounts of the bank was called for.

The outstanding amount of each loan account was added and it was found that the grand total was tallying with outstanding loans and advances up to R7,457.49 crore as on March 31, 2018. While excluding the undisclosed HDIL-related accounts (and other 20 undisclosed loan accounts), the bank replaced these accounts, by adding 21,049 fictitious loan accounts in the master data so that the summation of the outstanding balance of all the entities tallied with the balance sheet figure of bank's loan portfolio (Rs 7,457.49 crore).

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No. of employees with access to HDIL accounts

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