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The Economic Offences Wing (EOW) of the Mumbai Police has filed an FIR against key officials of the Punjab and Maharashtra Co-operative (PMC) Bank in connection with the scam at the bank.
The FIR names Joy Thomas, former Managing Director of PMC Bank, Waryam Singh, Chairman of the bank and other officials of the bank along with the promoters of HDIL Pvt. Ltd under several sections of the Indian Penal Code (IPC) for alleged fraud.
The FIR was registered on behalf of the Reserve Bank of India (RBI) for alleged fraud.
PMC created dummy accounts
According to the FIR/statement, between 2008 and August 2019, HDIL Pvt. Ltd had taken a loan from PMC Bank's Bhandup branch. However, the said company was unable to return the amount, and the PMC Bank did not declare HDIL's account as Non Performing Advances (NPA) and inform the RBI. PMC Bank's authorities allegedly made dummy accounts, and did not show the exact amount of loans granted by the bank.
According to the EOW it is alleged that the authorities of both PMC bank and HDIL committed the fraud together and siphoned off the monies worth Rs 4,355 crore for their personal use.
Hence, the offense has been registered under sections 409 (Criminal breach of trust by public servant, or by banker, merchant or agent) 420 420, (Cheating and dishonestly inducing delivery of property) 465 (punishment for forgery), 466 (Forgery of record of Court or of public register by a public servant) 471 (using a forged document as genuine) of the Indian Penal Code (IPC).
According to a source, "First the documents related to the case will be procured from the bank, there will be a search warrant for it as well. There will be a notice given to the said people. All the alleged accused will be summoned for inquiry."
PMC has total exposure of Rs 2,500 cr to HDIL
Joy Thomas, former MD & CEO, had admitted last Friday that PMC Bank has an exposure of Rs 2,500 crore to real estate developer HDIL. This exposure works out to about 30 per cent of its total advances.
The Reserve Bank of India (RBI) has placed Mumbai-based PMC Bank under directions for six months from the close of business of the bank on September 23, 2019.
The depositors will be allowed to withdraw a sum not exceeding Rs 10,000 of the total balance in every savings bank account or current account or any other deposit account by whatever name called, subject to conditions stipulated in the RBI Directions.
PTI adds
The Mumbai Police said a Special Investigation Team will be probing the case.
“As per initial investigations, the bank’s losses since 2008 were Rs 4,355.46 crore,” police said.
The bank’s former Chairman Waryam Singh, Managing Director Joy Thomas and other senior officials, along with the Director of HDIL, Wadhawan, have been named in the FIR. The first name of Wadhawan was not immediately available.
Modus operandi
Explaining the modus operandi of the case, the FIR said that HDIL promoters allegedly colluded with the bank management, to draw loans from the bank’s Bhandup branch. “Despite non-payment, the bank officials did not classify the loans as non-performing advances and intentionally hid the information about the same from RBI,” an official statement from the police said.
They also created fictitious accounts of companies which borrowed small sums of money, and created fake reports of the bank to hide from the regulatory supervision, it said.
The FIR has been filed under Sections 409 (criminal breach of trust by a public servant or banker), 420 (cheating), and 465, 466 and 471 (related to forgery) of the Indian Penal Code along with 120 (b) (criminal conspiracy).
The bank, which has 137 branches and over Rs 11,000 crore in deposits, has been put under restrictions since last week after the RBI discovered certain financial irregularities in the functioning of the multi-state lender.
According to sources, the overall exposure of the bank to the financially stressed HDIL group is around Rs 6,500 crore or over 73 per cent of the advances, and all of it is not being serviced. Under the restrictions, which are to be applicable for six months, a depositor is able to withdraw only Rs 10,000 per account. It can also not take fresh deposits or extend any new loans.
The restrictions have led to a massive public outcry with people thronging the branches for their money. The RBI has said that 60 per cent of the accounts have balances under Rs 10,000 and will not be impacted by the measures.
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