The scam-riddled Punjab and Maharashtra Cooperative (PMC) bank was used as a personal bank by the accused promoters of HDIL, Rakesh and Sarang Wadhawan. The Wadhawans did this with the help of top officials of the bank. PMC Bank Chairman Waryam Singh was Rakesh Wadhawan's classmate from college. Managing Director Joy Thomas stated that HDIL helped the bank when it was on the verge of collapse and in turn he felt indebted to the company when it was in need.
It has been revealed that on multiple occasions, loans were given to the Wadhawans through the treasury chest by Thomas without any record or entry. During the investigation it was also found that loans were sanctioned and disbursed before forms were filled for the loan requirement. Economic Offences Wing (EOW) of the Mumbai Police have also found out that security for loans and overdraft facilities were less that 50 per cent of the value of loans extended to the company.
The PMC Bank-HDIL case chargesheet:
The chargesheet filed by the EOW sheds light on how the bank's assets were misused by the Wadhawans with help from Singh, Thomas and other directors of the PMC Bank. The chargesheet states that HDIL that has held 44 accounts of their group companies at the bank since 2011 started defaulting on various loans but never faced any repercussions. The bank officials kept misleading the Reserve Bank of India by camouflaging these NPAs by forging Advance Master Indent and Off Site Surveillance (OSS) statements.
A PMC Bank employee has said that additional fictitious accounts were created and added to hide the dues of HDIL while submitting the OSS statements to the RBI. She said that the statement was prepared on orders of senior officials of the banks, including Thomas. The employee also said that she has been preparing similar OSS statements since 2015 to hide HDIL's outstanding dues.
The statement said, "It was the practice of PMC bank to show additional count of fictitious loan accounts to conceal the HDIL group companies' credit exposure. However when RBI sough the list of bank's all borrowable accounts as reported in OSS in 2015, PMC bank started preparing fictitious loan accounts firstly in excel sheet and thereafter these accounts were uploaded or created in the parallel system maintained by the bank for the purpose of RBI inspection/audit. Parallel system was prepared for CBS (Core Banking System) used by PMC i.e. OMNI for period previous to April 13, 2015 and for period after 13 April 2015".
The EOW officials have seized certified copies of 21049 fictitious accounts so far.
How the fictitious accounts were created at PMC Bank:
PMC Bank officials brought in a list of current accounts created or closed during respective financial years on orders of Joy Thomas. Those accounts were extracted from the CBS along with the names of the account holder, account number, customer number, account opening date etc.
Once the said details were extracted, the actual number of extracted current accounts was replaced with fictitious account numbers that never appeared in the CBS. This replacement was done in such a manner that they appeared as Overdrafts against fixed deposits under the scheme floated by the bank.
Then the outstanding amount of HDIL group companies and other accounts that were not disclosed to RBI were distributed randomly against the newly created fictitious accounts.
Details such as sanction amount, sanction date, sanction limit, expiry date, security value etc of the loan accounts were also updated.
The officials prepared the Advances Master file for the financial years 2014-15, 2015-16, 2016-17 and 2017-18. The numbers of fake accounts kept increasing every year as HDIL kept defaulting on loans.
The bank had 2,500 fictitious accounts in March 2015, that increased to 12,500 in March 2016, 17,469 in March 2017 and 21,049 accounts in March 2018.
The EOW chargesheet states that there were multiple deletion and alteration in electronic records of the bank during this period. ED that is looking into money laundering found that the loan amount from PMC was diverted for ever-greening of loans and to pay off loans from other financial institutions.