A police case has been filed against Sarang Wadhawan and Rakesh Kumar Wadhawan, promoters of the crisis-hit real estate firm Housing Development and Infrastructure Ltd (HDIL), for loan default reported to be worth up to Rs 4,300 crore, sources said.
The government has also issued a lookout circular against the two executives, news agency Press Trust of India reported on Monday. A lookout circular is issued against a person to stop him or her from leaving the country.
The First Information Report (FIR) includes the name of Joseph Thomas, former managing director of Punjab and Maharashtra Co-operative (PMC) Bank, whose customers have been left stressed after the Reserve Bank of India (RBI) imposed withdrawal limits.
The RBI on September 24 imposed restrictions on PMC Bank citing "major financial irregularities, failure of internal control and systems", among other red flags. The RBI barred PMC Bank from renewing or granting loans, or making investments without its approval.
The Mumbai Police will investigate whether HDIL was given "favours" by PMC, whether it violated the central bank's lending norms and whether the senior officers of the co-operative bank and the borrower conspired to cheat the bank, sources said.
PMC has not mentioned the loan default by HDIL in its annual report and continued to give loans despite the company being taken for insolvency. The bank's losses since 2008 is Rs 4,355.46 crore, the police said.
PMC's exposure to HDIL is nearly 73 per cent of its total loan book size of Rs 8,880 crore as of September 19, PTI reported quoting an unnamed source.
The withdrawal limit for account holders of PMC was initially kept at Rs 1,000 for each customer for six months, which was later raised to Rs 10,000.
PMC Bank itself sought to calm depositors and Mr Thomas, in a text message to customers on Tuesday last, attempted to reassure them that the bank's issues would be resolved within six months, news agency Reuters reported.
PMC's plight has raised new fears about the broader Indian banking sector that has been rocked by a fraud worth thousands of crores at Punjab National Bank, the collapse of a major infrastructure lender DHFL, bad loan issues at state-run banks and a liquidity squeeze that has hit shadow lenders.
Currently, HDIL is developing projects at Kurla, Nahur, Mulund and Palghar, and has a residential portfolio of 86.22 lakh sqft under construction. It has a land reserve of 193 million sqft as on March 31, with 90 per cent of its land reserves in Mumbai Metropolitan Region, as per its 2018-19 annual report.
Incorporated in 1996, Mumbai-based HDIL mainly focused on real estate development in the Mumbai Metropolitan Region, which included clearing slum land and rehabilitating the residents.
With inputs from PTI and Reuters