PMC Bank Crisis: Officials raids six locations in Mumbai and adjoining areas

ED raided six locations in Mumbai and adjoining areas in relation to Punjab and Maharashtra Cooperative (PMC) Bank case

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Today (October 4) ED raided six locations in Mumbai and adjoining areas in relation to Punjab and Maharashtra Cooperative (PMC) Bank case. 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.

In addition to this, the officials have also registered a money-laundering case to probe alleged fraud in PMC bank. These raids are being conducted after the central agency filed a complaint under the Prevention of Money Laundering Act

On Oct 3, HDIL promoters Rakesh Wadhawan and Sarang Wadhawan were arrested by Mumbai police. Their property which is being pegged at worth Rs 5000 crore has also been frozen.

It is noteworthy that, on September 20 a plea has been filed in Bombay High Court challenging the restrictions imposed by the Reserve Bank of India on the bank.

The public interest litigation (PIL) was filed by an NGO Consumer Action Network and eight persons, who claimed to be depositors and account holders in the PMC 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 was later increased to Rs 10,000 per account holder for a period of six months. Now it has been further relaxed (on October 3) 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.

Union Finance Minister Nirmala Sitharaman last week while addressing the crisis at PMC bank said, “I will not get into this at this stage. Will wait, let there be some kind of comprehensive picture emerging post which certainly the government will have to see what best can be done". This has not been able to console the depositors that have been queuing in front of the bank every day demanding that their hard-earned money bank.

It is being said that 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.

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