PMC Bank fraud: Former director, two valuers held

The economic offences wing (EOW) of Mumbai Police arrested a former director of the crisis-hit Punjab and Maharashtra Co-operative (PMC) Bank and two valuers in

The economic offences wing (EOW) of Mumbai Police arrested a former director of the crisis-hit Punjab and Maharashtra Co-operative (PMC) Bank and two valuers in connection with the ₹6,670-crore banking fraud, taking the total number of arrests in the case to 15.

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Ex-director Jasvinder Banwait was arrested from Thane, while Vishwanath Prabhu and Shripad Jere were arrested in Mumbai. Joint commissioner of police (EOW) Rajvardhan Sinha confirmed the development. Banwait is accused of overlooking gross irregularities at the bank and not raising an alarm.

“The valuers are accused of over-valuing seven properties, which were kept as mortgage against loans by [real estate company] Housing Development Infrastructure Limited (HDIL). The valuers exaggerated the actual value of the assets to meet the criteria set by the Reserve Bank of India (RBI) and favour HDIL. Based on their valuation, the bank sanctioned HDIL loans. The probe has revealed the valuers had indulged in the wrong practice on the instructions of former managing director Joy Thomas,” said an EOW officer.

Investigators are probing what benefit the valuers received from Thomas or from HDIL promoters Rakesh and Sarang Wadhawan.

The three accused were sent to police custody up to March 16 by a local court.

PMC Bank’s top management is accused of unlawfully sanctioning loans to HDIL group of companies and favouring the Wadhawans. The bank concealed HDIL’s non-performing assets (NPAs) from RBI. It was revealed that HDIL accounted for 73% of the bank’s total loans.

On September 23, 2019, RBI placed restrictions on PMC Bank and barred it from proceeding fresh loans or accepting deposits. EOW registered an FIR and through a special investigation team (SIT), started investigating irregularities of more than ₹6,670 crore in the bank.

EOW’s probe revealed that 44 accounts, allegedly linked to HDIL, were masked by tampering bank software, and remained virtually hidden from the core banking solution. Only a chosen few employees – allegedly close to Thomas – knew of these accounts.

EOW earlier arrested 12 people, including Wadhawans, Thomas, bank chairman Waryam Singh, other directors and auditors.

On December 27, 2019, EOW filed its main charge sheet of 33,000 pages. EOW has provisionally attached properties worth ₹4,000 crore in the matter. The Enforcement Directorate (ED), too, registered a case on September 30, under the prevention of money laundering Act (PMLA), to investigate the matter.

The RBI is in process of auctioning the HDIL properties mortgaged with them. Once valuation of assets is done, they would auction the properties under Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI) and infuse the money in the bank. EOW is awaiting the HDIL’s final audit report in the matter, which will give a clear idea to the investigators on the bogus companies formed to route the loan money and benefit HDIL.