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PMC Bank fraud: Mumbai police file FIR against HDIL and bank officials, SIT formed to probe the case

An official of the EOW said that the manager has lodged a complaint on the behest of the RBI appointed administrator.

The Economic Offences Wing (EOW) of the Mumbai Police has filed FIR against HDIL and Punjab & Maharashtra Cooperative (PMC) Bank officials in the PMC bank fraud case. The persons named in the FIR include PMC bank’s former chairman Waryam Singh, former Managing Director Joy Joseph Thomas, Housing Development and Infrastructure Limited (HDIL) group promoters Sarang Wadhawan and Rakesh Wadhawan.

After the Reserve Bank put severe restrictions on PMC Bank last week, bank’s former MD Joy Thomas wrote a letter to RBI informing that 73% of its total loan portfolio was given to a single entity, the HDIL, which has gone bankrupt. Thomas has been suspended after the scam came to light. HDIL was defaulting on its loan for a long time, but it was not flagged as NPA, and even after huge outstanding loan, the bank had granted personal loan to HDIL promoters which were used to repay loans of other banks by the bankrupt company.

The EOW has filed cases under Sections 409 (Criminal breach of trust), 420 (Cheating and dishonestly), 465 (forgery), 466 (Forgery of record ), 471 (using forged document as genuine) and 120B (criminal conspiracy) of the Indian Penal Code. EOW has also formed a Special Investigation Team (SIT) to probe the case.

The FIR says that irregularities worth ₹4,355.46 crores have been committed in the case, although the amount can go up during the course of the investigation. The police will investigate cases of violation of RBI norms in not disclosing NPA and exceeding lending limits for single entities, undue favour given to HDIL, and any instance of quid-pro-quo between the bank’s board of directors and the borrower company.  The FIR mentions that the bank kept its NPA data hidden from RBI by using fake loan documents.

The RBI has already dismissed the board of governors of PMC bank and has appointed an administrator. The bank has been put the bank under restrictions, putting a limit of ₹10000 withdrawal by depositors. The bank is also not allowed to give any loan without the prior approval of RBI. The restrictions have been put for six months, after RBI was informed about the PMC Bank fraud by a whistleblower inside the bank.

An official of the EOW said that “the manager has lodged a complaint on the behest of the RBI appointed administrator. His complaint is the starting point of the probe”. He also said that although the police believe the scam amount to be above ₹6000 crore, the amount of ₹4,355.46 crore was mentioned by the complainant and the same has been mentioned in the FIR.

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