In attracting and retaining customers and employees, a financial institution’s reputation must be given utmost importance. Reputation is key to establishing public and customer trust. A good reputation can put a financial institution to greater heights than its competitors.
In any country, financial institutions are the center of finance; thus, they are a vital part of the economy. In India, there has been a mess in the financial industry due to falling prey to default, rising bad loans, fraud, and scandals. This provided alarming jolts for India’s financial sector.
Despite this, it is almost impossible to keep people from putting money in banks, for it’s believed to be a safe and secure way of storing and growing money. It is best to know any bank’s credentials, whether large or small, before conducting business with them. In this article, you’ll discover the financial institutions in India with bad reputations.
Punjab and Maharashtra Co-operative Bank Limited or PMC Bank is a multi-state scheduled urban co-operative bank operating in the States of Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh, and Madhya Pradesh. They provide services including 360 days banking, mobile, and Internet banking, selling life/non-life insurance products and mutual funds, and lending money.
It has stood among the top 10 co-operative banks of the country until it faced a major controversy in 2019. The bank opened over 20,000 bogus bank accounts in the firm’s name.
While it’s not new for Indian banks to lend to promoters who squander money, this PMC Bank scam is not just about lending to callous firms. Money from the bogus accounts was given to clever Wadhawans, who used it to live out on yachts with Chinese circus performances.
Reserve Bank of India (RBI) handled the situation by imposing restrictions on the bank’s withdrawals. It banned depositors from taking out more than 1,000 rupees ($14) for six months, which led to panic protests in parts of the country. As it takes stock of the situation, the top financial institution has slowly been escalating the amounts that can be withdrawn.
Lakshmi Vilas Bank
After its foundation in 1926, this Chennai-based bank’s operations are spread over a network of 572 branches (including 7 commercial banking branches and1 satellite branch) and 5 extension counters. It has PAN India presence, supervised by 7 regional offices.
It offers a diverse range of banking services and solutions around the globe. It provides personal banking services like savings, deposits, loans, online and mobile banking, and more.
Due to the high level of bad loans, lack of sufficient capital to manage risks, and a negative return on assets for two consecutive years, RBI has initiated Prompt Corrective Action against Lakshmi Vilas Bank (LVB) in 2019. Delhi Police’s Economic Offences Wing registered a complaint against the board of LVB for alleged cheating and misappropriation of funds.
LVB took note of the imposed restrictions and actions to be taken with progress to be reported every month to RBI. These restrictions did not have any adverse implications on the bank’s day-to-day operations, including acceptance/repayment of deposits.
Dewan Housing Finance
Dewan Housing Finance Corporation Limited (DHFL) is a leading deposit-taking housing finance company headquartered in Mumbai. For more than three decades, it has been providing convenient access to affordable housing finance to fulfill home-ownership dreams of millions of lower and middle-income families in India.
Toward the end of 2018, rumors of a liquidity crisis in the company began circulating, which DHFL denied. In 2019, more than 10,000 fixed deposit holders of DHFL risked losing their savings as fraud allegations and fund diversion afflicted the mortgage lender. Nearly a lakh depositors, mostly senior citizens, who have been banking on their savings for healthcare and other expenses, are among the worst affected.
The depositors experienced difficulties in accessing their funds due to the blockage of such by the lender’s consortium. While the investigation is on-going, these depositors are worried about the fate of their life savings.
There are many considerations to take before choosing where to bank. Aside from focusing on products and services, it is vital to find reliable and trustworthy financial institutions to handle your hard-earned money. Look for banks that always put their best foot forward for their customers and the community.