PMC Bank fraud case: HDIL did not give sufficient collateral for 80% of its loans

At least 80% of the money the Punjab and Maharashtra Co-operative (PMC) Bank gave to Housing Development Infrastructure Limited (HDIL) in the form of loan/overdraft

At least 80% of the money the Punjab and Maharashtra Co-operative (PMC) Bank gave to Housing Development Infrastructure Limited (HDIL) in the form of loan/overdraft facilities was sanctioned without appropriate and sufficient collateral (security), investigations of the economic offences wing (EOW) have revealed.

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The prime accused, Rakesh and Sarang Wadhawans, kept taking funds in the form of overdraft facility from PMC Bank from 2008 to 2017, offering negligible properties as security, said EOW officers, adding senior bank officials were aware of it. One of the main accused, former MD Joy Thomas, has admitted to it. “Thomas told us that in 2017 he got worried about loans given to HDIL and started insisting Wadhawans keep sufficient properties as security with the bank. HDIL then started to do it,” said an EOW officer.

“When EOW officers asked Thomas about the serious wilful negligence to benefit HDIL, he defended the decision by saying he was afraid of losing the biggest borrower (customer) of the bank and hence he did not force Wadhawans for heavy security and kept clearing their ODs,” another EOW officer said.

The Wadhawans are suspected to have taken funds from PMC Bank indirectly through other companies.

The investigators are finding out which other companies are linked to the HDIL group. Once the links are established, the worth of the fraud may go up. So far, the probe has found irregularities worth ₹500 crore, in addition to the previous ₹4,355 crore mentioned in the FIR.

Discrepancies and irregularities are expected to surface in the forensic audit report which is expected to come next week.

Meanwhile, a local court gave time to the Enforcement Directorate, asking them to file their say on the moveable (perishable) assets, which RBI administrator of PMC bank seeks to auction, by Friday.