PMC Bank Crisis: EOW states 21,000 Fake Accounts Created To Hide Defaults By HDIL

According to the police, PMC Bank had replaced 44 loan accounts of the HDIL group with over 21,000 fictitious loan accounts, and through this managed to "camouflaged" defaults by the group.

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The crisis at the Punjab and Maharashtra Cooperative (PMC) Bank has been garnering a lot of attention. People are still to wrap their heads around the fact that such a big fraud could have been executed right under their noses.

According to the police, PMC Bank had replaced 44 loan accounts of the HDIL group with over 21,000 fictitious loan accounts, and through this managed to "camouflaged" defaults by the group.

This disclosure was made by The Economic Offences Wings of city police while seeking custody of chairman and managing director of Housing Development and Infrastructure Ltd (HDIL) Rakesh Wadhawan and his son Sarang, arrested on October 3.

For now, the court has remanded them in police (EOW) custody till October 9.  The suspended managing director of Punjab and Maharashtra Co-operative (PMC) Bank, Joy Thomas has been sent to police custody till October 17 by the Mumbai court. Joy Thomas along with HDIL promoters are accused in the Rs 4,355-crore PMC Bank scam. Joy Thomas was arrested by the Mumbai Police on Friday (October 4).

As per the remand plea, "In the details of loan accounts submitted to the Reserve Bank of India for the year ended March 31, 2018, the PMC replaced the 44 loan accounts of HDIL and its group of companies, whose outstanding balance were significantly higher, with 21,049 fictitious loan accounts”.

These loans were not recorded in the core banking system, instead, they were mere entries in the "master indent" (details of loan accounts) submitted to the RBI for inspection, the EOW said.

It is being said that Joy Thomas had full knowledge of what was happening in the bank. The crisis in PMC bank was first exposed on September 23, when RBI directed it to shut down its operations. In addition, a withdrawal limit of ₹1000 per customer which has been imposed. This has now (on October 3) been relaxed to Rs 25,000 and as per RBI now with this new limit, 70 per cent of the bank holders will be able to withdraw their entire savings.

According to reports, the major cause of this crisis is the exposure that the bank had to bankrupt Housing Development and Infrastructure Limited (HDIL). The total exposure to the sick real estate company is being pegged over Rs 6,500 crore, which translates to 73 per cent of its total assets worth.

ED raided six locations in Mumbai and adjoining areas in relation to PMC Bank case on October 4, 2019. Premises of the now-bankrupt Housing Development and Infrastructure Limited (HDIL) and director Rakesh Wadhwan's house were among the locations searched by the ED.

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