Mumbai: Economic Offence Wing of Mumbai Police on Thursday arrested Housing Development Infrastructure Limited (HDIL) Directors Sarang Wadhawan and Rakesh Wadhwan. They are accused of loan default in connection with Punjab and Maharashtra Cooperative (PMC) Bank case.
Both of them were called for interrogation today. They were arrested after they failed to cooperate in the investigation.
Ten of 44 accounts which led to PMC Bank falling in debt were linked to HDIL. Personal accounts of Sarang and Wadhwan were among these ten accounts.
On September 30, EOW of Mumbai Police had registered an FIR against senior officials of HDIL and PMC bank in connection with a fraud of over Rs 4,355 crores.
"EOW has formed a special investigation team for the probe. The FIR has been registered on the complaint given by one Jasbir Singh Matta," police said in a press note.
According to the police, PMC bank officials gave loans to HDIL between 2008 and 2019 despite no repayment of the previous loans.
The FIR was registered under Sections 409 (criminal breach of trust), 420 (cheating), 465 (forgery), 466 (forgery of record of court or public register), 471 (using a forged document as genuine) and 120B (criminal conspiracy).
Suspended MD Joy Thomas had on September 28 admitted that the bank did not report the financial exposure to the Reserve Bank of India (RBI) for over six years.
RBI had, on September 26, increased the withdrawal limit from Rs 1,000 to 10,000 after several bank account holders protested against the move outside its branch in Mumbai.
Background:
The PMC bank as of March 2019, had deposits of Rs 11,617 crores and advances of Rs 8,383 crores respectively. As against Rs 100.90 crore in March 2018 its net profit was Rs 99.69 crore in March 2019. The bank’s gross non-performing assets (GNPA) were 3.76% and net NPAs were 2.19% of its advances.
According to Bloomberg as per exposure norms laid down by the RBI in 2013, an urban cooperative bank can lend up to 15% of its total capital to a single borrower and 40% to a group. The urban cooperative banks total capital funds as on March 31 stood at Rs 1055 crore
But HDIL directors Sarang Wadhwan and Rakesh Wadhwan have been accused of Rs. 6,500 Crore Loan Default which is far beyond the lending limit.
The suspended managing director of Punjab and Maharashtra Cooperative (PMC) Bank, Joy Thomas, has blamed the auditors for the mess at the bank.
In a five-page letter to the Reserve Bank of India (RBI) dated September 21 after a board member blew the lid on the fraud at PMC, which is among the top ten urban cooperative banks, Thomas has confessed to the role of the top management, including a few board members, in hiding the actual NPA numbers and also the actual exposure to the bankrupt HDIL, which is stated to be around Rs 6,500 crore or over 73 per cent of its total loan book of Rs 8,880 crore.
Of the 44 loans worth nearly 73 per cent of PMC's total loan book size of Rs. 8,880 crore it has violated the regulations which forbid banks from handing out such a large proportion of cash to one sector let alone a single firm.
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