A day after the Chairman and Managing Director of real estate developer HDIL were arrested in connection with the Rs 6,500 crore loan default case that has hit the Punjab & Maharashtra Co-operative (PMC) Bank, the Economic Offences Wing (EOW) of the Mumbai Police has now arrested Joy Thomas - suspended Managing Director of the bank. According to reports, Mumbai Police is also searching for PMC’s Waryam Singh.
Meanwhile, HDIL chairman and managing director Rakesh Wadhawan and his son Sarang were on Friday sent to police custody till October 9, an official said.
They were arrested by the special investigation team (SIT) of the Economic Offences Wing (EOW) of Mumbai Police on Thursday and produced before a local court on Friday.
EOW had registered an FIR on Monday against senior officials of HDIL and the PMC Bank for allegedly causing losses to the tune of Rs 4,355.43 crore to the bank.
Property of Rs 3,500 crore belonging to the company was seized by the EOW during the investigation, he said.
The EOW had also appointed a special team to carry out investigations into the case.
As per the complaint, the bank officials, between 2008 and 2019, deliberately violated banking norms and showed false profits to mislead the authorities, although the bank was actually incurring losses.
It also said that the bank also veiled the group's large exposure and non-performing assets (NPAs) from the Reserve Bank of India (RBI) by creating dummy accounts.
The bank had allegedly opened a number of dummy accounts to replace the stressed accounts held by Wadhawans-led HDIL.
Last week, the RBI barred the Punjab & Maharashtra Cooperative Bank Ltd (PMC), Mumbai from carrying out the majority of its routine business transactions for a period of six months, sparking panic among the depositors and sending shockwaves in the city banking and business circles on Tuesday.
In a letter to RBI, Thomas admitted large-scale wrongdoing and the cover-up exercise.
"Some of the large accounts were not reported to RBI from 2008 because of fear of reputational risk," Thomas has revealed in his letter.
He said that in 2011, the size of the bank was around 57 branches with deposits of Rs 2,824 crore and advances of Rs 2,000 crore. The exposure of HDIL group was then Rs 1,026 crore. "Had we classified them as non-performing assets, we would have to stop charging interest on these accounts and we could have made losses. The growth part of the bank would have got hampered."
Thomas, however, said that the bank is still optimistic about the repayment plan of HDIL group and the group always promised to clear the dues and gave backup security to back their loans. The letter further said: "Every year during the course of RBI inspection we undergo a lot of stress due to concealment of information from RBI. It was worrying each of us."
With PTI Inputs