The now-suspended managing director (MD) of the crisis-hit Punjab and Maharashtra Cooperative Bank (PMC), Joy Thomas, was placed under arrest by Mumbai Police’s Economic Offences Wing (EOW) on Friday evening. This is the third arrest in the case. Thomas will be produced before a court today.
Thomas and former PMC Bank chairperson Waryam Singh were named among the accused in the first information report filed earlier in the week in the case of financial irregularities at PMC Bank. Previously, the EOW had pasted notices at Thomas’s residence, asking him to join the investigation. He was arrested on Friday evening at Powai. The police are still on the lookout for Singh.
Sources said Thomas’s arrest will help the probe as he was MD of PMC Bank since 1999. Thomas was suspended last week after the Reserve Bank of India (RBI) took charge of PMC Bank. The EOW’s probe revealed 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 bank accounts.
In a five-page letter to the RBI dated September 21, Thomas had admitted that PMC Bank had concealed information from board members, auditors and regulators due to “fear of reputational loss”. “As the loans outstanding were huge and if these were classified as NPAs [non-performing assets], it would have affected the profitability of the bank… this would have created reputation risk for the bank. As the HDIL group had a good record of clearing dues with certain delays, we continued to report all the accounts as standard accounts,” Thomas wrote in the letter, which HT has seen. The letter further details about PMC Bank’s relationship with Rakesh Kumar and Sarang Wadhawan, who were arrested yesterday and charged with money laundering. It also describes how the Wadhawans came to the bank’s rescue by infusing funds when PMC Bank was struggling.
{{/usCountry}}In a five-page letter to the RBI dated September 21, Thomas had admitted that PMC Bank had concealed information from board members, auditors and regulators due to “fear of reputational loss”. “As the loans outstanding were huge and if these were classified as NPAs [non-performing assets], it would have affected the profitability of the bank… this would have created reputation risk for the bank. As the HDIL group had a good record of clearing dues with certain delays, we continued to report all the accounts as standard accounts,” Thomas wrote in the letter, which HT has seen. The letter further details about PMC Bank’s relationship with Rakesh Kumar and Sarang Wadhawan, who were arrested yesterday and charged with money laundering. It also describes how the Wadhawans came to the bank’s rescue by infusing funds when PMC Bank was struggling.
{{/usCountry}}Last week in a press conference, Thomas had said that the RBI could have handled the situation better. “Whatever has happened is not fraud, it is technical in nature and we could have rectified it without affecting the depositors,” Thomas had said.
The EOW and Enforcement Directorate have so far conducted searches at six places senior management of the bank and promoters of HDIL. “We are recording statement of bank officials. We will be conducting investigation pertaining to hard disk and documents recovered during searches. We are also awaiting initial reports from forensic auditor. The quantum of the exact amount of loans will be available after auditing report,” said an EOW officer.
PMC Bank is accused of hiding information from the RBI from 2008 to 2019. Over 73% of the bank’s total loan book was to the now-bankrupt HDIL group and all of it was not being serviced.
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