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Sunday, Dec 15, 2019

PMC Bank fraud: ‘HDIL gave ₹70 cr to bank directors’ family’

mumbai Updated: Dec 04, 2019 00:52 IST
Jayprakash S Naidu
Jayprakash S Naidu

According to an interim forensic audit report, the total cumulative loss suffered by Punjab and Maharashtra Co-operative (PMC) Bank is ₹6,670 crore. Approximately ₹70 crore was allegedly distributed by real estate company Housing Development Infrastructure Limited (HDIL) among the family members of the bank’s directors as kickbacks.

An interim forensic report, drawn up by a private company deputed by the Reserve Bank of India (RBI), was submitted to Mumbai Police’s economic offences wing (EOW) last week. The report revealed that between September 7 and September 19, ₹65 crore was withdrawn by 23 people, including prominent customers, bank staff and directors on the bank’s board. On September 23, the RBI put restrictions on PMC Bank. A week later, a first information report (FIR) was registered under relevant sections of the Indian Penal Code (IPC) against top officials of PMC, HDIL and others.

EOW also found out that another ₹5 crore had been misappropriated by employees of PMC Bank. Investigations also showed that the statutory and concurrent auditors of the bank flouted the Institute of Chartered Accountants of India’s (ICAI) norms by favouring HDIL and its sister concerns.

So far, 12 people have been arrested, three on Tuesday, in the case including PMC Bank’s former managing director Joy Thomas; ex-chairperson of PMC Bank, Waryam Singh; and HDIL’s promoters, Rakesh and Sarang Wadhawan. EOW officers said more arrests are likely. The Enforcement Directorate (ED), which is running a parallel probe, and EOW are in the process of auctioning seized assets of HDIL to recover money for PMC Bank.

What is the case?

According to the FIR registered by EOW, the directors and other officials of PMC Bank allegedly availed loans unlawfully to HDIL and its entities between 2008 and 2019. The accused bank officials have admitted to not classifying loans on which HDIL had defaulted for years, as non-performing assets.

The accused bank officials in connivance with others had replaced 44 suspicious loan accounts linked to HDIL with 20,149 fictitious bank accounts whose individual balances were low, resulting in wrongful gain to private entities including the HDIL group of companies.

The FIR names eight companies linked to HDIL with a total outstanding balance of ₹4,355 crore in March. Of the 44 defaulting accounts, 10 belong to HDIL and companies linked to HDIL. One of the 10 accounts belongs to Rakesh Wadhawan with an outstanding balance of ₹2,008.62 crore on August 31, 2019.