The former board members of Punjab Maharashtra Co-operative (PMC) Bank and the promoters of crisis-hit real estate firm HDIL have been charged with money-laundering by the Enforcement Directorate in the Rs. 6,500 crore loan default case.
The agency is conducting searches at six places in Mumbai and neighbouring areas linked to the former chairman of the bank and promoters of crisis-hit real estate firm HDIL. The complaint has been filed under the Prevention of Money Laundering Act.
Two directors of HDIL that set off the crisis at PMC Bank by defaulting on loans worth nearly Rs. 6,500 crore were arrested on Thursday. Rakesh Wadhawan and Sarang Wadhawan, senior executives at Housing Development and Infrastructure Ltd (HDIL), were arrested by the Economic Offences Wing of the Mumbai Police.
The Wadhwan father-son duo, who were produced in a Mumbai court today, have been sent to police custody till October 9.
The Wadhawans were named in a police complaint that also accused the bank's management of concealing non-performing assets and disbursing loans to HDIL leading to a loss of at least Rs. 4,300 crore, in the latest banking fraud case to spook the country's depositors and investors.
The police complaint filed earlier this week alleges that the PMC officials misled the Reserve Bank of India for over a decade from 2008 to August 2019. The fictitious loan accounts were not entered into the bank's core banking system - a factor key in the Rs. 14,000-crore fraud at Punjab National Bank that was uncovered in 2018.
Besides Rakesh Wadhawan and Sarang Wadhawan, the complaint named the bank's then chairman Waryam Singh and its managing director Joy Thomas, along with other bank officials, and accused them of criminal breach of trust, forgery and falsification of records.
The Enforcement Directorate case, meanwhile, is based on an FIR (First Information Report) filed by the Economic Offences Wing of Mumbai Police.
The PMC case has sparked renewed concerns about the health of India's troubled banking sector, which has been rocked by a multi-billion dollar fraud at a state-run lender, the collapse of a major infrastructure lender, bad loan issues at state-run banks and a liquidity squeeze that has hit shadow lenders.
On Thursday, the Reserve Bank of India on Thursday raised withdrawal limit for account holders of the stressed PMC Bank to Rs. 25,000 from earlier withdrawal limit of Rs. 10,000.
The Reserve Bank of India (RBI) last week moved to take charge of PMC, one of India's top five co-operative lenders with more than nine lakh depositors, and suspended Joy Thomas and the bank's board after uncovering lending irregularities.
More than two dozen co-operative banks are now under RBI administration, but PMC Bank - with deposits of Rs 116.2 billion as of March 31 - is by far the largest.