Mumbai: The Economic Offences Wing (EOW) of Mumbai Police on Monday seized property worth ₹500 crore belonging to certain entities involved in the alleged ₹4,355.43 crore financial scam at Punjab and Maharashtra Co-operative (PMC) Bank Ltd, a top investigating official said.
The official did not disclose whether the properties seized were from Housing Development and Infrastructure Ltd (HDIL), whose promoters were arrested last week in connection with the case. With the latest attachment, the total amount of seizures is estimated at around ₹4,000 crore, he said, requesting anonymity.
On 24 September, the Reserve Bank of India (RBI) asked the multistate co-operative bank to stop operations for six months, and capped withdrawals at ₹1,000 per account, an amount which was later increased to ₹25,000. The EOW’s initial scrutiny early last week showed around 44 loan accounts linked to HDIL and its associate companies at PMC Bank. However, later it was revealed that the bank had created 21,000-odd fictitious bank accounts to “camouflage" defaults by HDIL, the police had said last week.
On 3 October, the EOW arrested HDIL promoters Rakesh Wadhawan and son Sarang Wadhawan on charges of alleged involvement in the fraud. The father-son duo is in police custody till 9 October for further investigations. The EOW has registered an FIR against the Wadhawans, PMC Bank and its former managing director Joy Thomas. According to the preliminary probe by the EOW, the bank did not report its exposure to HDIL for 6-7 years.
“We have discovered more bank accounts linked to the case. We will not be naming whose bank account and how much money at the moment. We are still in the process of investigation," said Rajvardhan Sinha, joint commissioner of police (EOW).
After the arrests, PMC Bank appointed Grant Thornton as suggested by EOW to conduct a forensic investigation into the allegations made by Thomas about how the bank managed to ignore banking regulations spanning several years. Grant Thornton will assist the EOW in its probe.
On Saturday, EOW arrested Waryam Singh, PMC Bank’s former chairman and managing director, in connection with the scam.
“There are properties which are still not mortgaged by the bank. Documents and accounts of such properties have been seized. They will be presented before the honourable court for further action," the official cited earlier said.
Thomas had confessed to RBI that the bank’s exposure to bankrupt HDIL is over ₹6,500 crore—four times the regulatory cap, or 73% of its entire assets of ₹8,880 crore.
The fictitious accounts used are old bank accounts, mostly dormant and closed, and have been sent to RBI, said another official with the special investigation team (SIT) probing the bank scam.
Despite non-payment, bank officials did not declare HDIL’s exposure as bad loans and intentionally hid the information from RBI by creating fake records of smaller loan accounts, the police said in a statement previously.
HDIL is in bankruptcy court after failing to repay its debt. The National Company Law Tribunal admitted insolvency proceedings against the Mumbai-based builder following a plea filed by Bank of India under Section 7 of the Insolvency and Bankruptcy Code.
The role of the bank’s statutory auditors has also come under the scanner. The institute of Chartered Accounts of India said it has also launched investigations against PMC’s statutory auditor, Lakdawala & Co.