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PMC Bank fraud: ED raids 6 locations in Mumbai, files money-laundering case

BusinessToday.In     October 4, 2019

Based on the FIR filed by the Mumbai police in connection with the Punjab and Maharashtra Cooperative Bank case, the Enforcement Directorate on Friday raided six locations in Mumbai and adjoining areas. The ED has also registered a money-laundering case to probe the alleged fraud in the PMC Bank case. The ED filed a criminal complaint under the Prevention of Money Laundering Act to investigate the alleged scam.

The Economic Offences Wing of the Mumbai Police on Thursday arrested HDIL promoters Rakesh Kumar Wadhawan and Sarang Wadhawan in the case. The police also attached their properties worth Rs 3,500 crore. Rakesh is the executive chairman of HDIL, whereas Sarang is the managing director of the company. Both of them have been sent to police custody till October 9. The FIR also named PMC Bank's former Chairman Waryam Singh and now-suspended Managing Director Joy Thomas.

The Mumbai Police have also discovered that PMC Bank officials deposited around Rs 2,000 crore directly in personal accounts of HDIL bosses. The money was deposited as the loan amount sanctioned by the bank to the bankrupt real estate company. Police say PMC bank officials created 44 hidden accounts with fake credentials to help HDIL. Loans given to HDIL later turned into NPAs (Non-Performing Assets), leading to its bankruptcy and PMC's exposure of thousands of crores.

These accounts didn't reflect in the RBI's audit of the bank, as they were secured with passwords. Thomas had earlier admitted to the RBI that the bank hid information regarding its bad loans to bankrupt real estate company HDIL. He told the RBI that the bank's actual exposure to the bankrupt HDIL stood at over Rs 6,500 crore -- four times the regulatory cap or 73 per cent of its entire assets of Rs 8,880 crore.

The RBI had placed operational restrictions on the PMC Bank on September 23, citing irregularities in loans given to some companies for six months. It has been barred from renewing or granting loans or making fresh investments without the apex bank's approval.

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Edited by Manoj Sharma

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