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PMC bank fraud: ED raids underway at six locations in Mumbai

The Indian Express logo The Indian Express 04-10-2019

© Satyabrata Tripathy/Hindustan Times via Getty Images The Enforcement Directorate (ED) Friday raided six locations in Mumbai in connection with irregularities in the management of Punjab and Maharashtra Cooperative Bank. Searches were conducted at the residences of the promoters of Housing Development and Infrastructure Limited (HDIL) and PMC Bank board members, among others.

Based on an FIR registered by the Economic Offences Wing (EOW) of the Mumbai Police, the ED had filed a case under the Prevention of Money Laundering Act (PMLA).

The ED is probing allegations that PMC Bank underreported non-performing assets, or bad loans, after funding a clutch of companies, mainly in the troubled real estate sector.

The total bad loans could be between Rs 2,000-2,500 crore. The development comes a day after HDIL promoters, Rakesh Wadhawan and his son Sarang, were arrested by the Mumbai Police.

The duo, booked on charges of cheating, forgery and criminal conspiracy, was questioned Thursday morning and later arrested as they “did not cooperate with the probe”, the police said.

An officer told The Indian Express that the police had found records of alleged direct transfers from the bank to the personal accounts of the Wadhawans that were password-protected. “During investigation, we found that there were nearly 44 accounts at the bank that were password-protected.

Watch: PMC Bank board members, HDIL promoters charged with money laundering

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These accounts were linked to the Wadhawans and DHIL-linked entities where a lot of the money from the bank had been transferred,” the officer claimed.

The Reserve Bank of India (RBI) had, last month, barred PMC Bank from routine banking activities after the collapse of the bank.

PMC Bank’s now suspended managing director Joy Thomas admitted that the bank extended Rs 2,500 crore loans — almost 30 per cent of its total loan portfolio of Rs 8,383 crore — to HDIL over several years.

He said the bank did not disclose to the central bank that HDIL was unable to pay for years fearing it “will affect the bank’s growth”.

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