Table of Contents
- EOW charges HDIL promoter Sarang in another fraud case
- PMC Bank scam fallout: Government introduces bill to strengthen cooperative banks
- SC stays sale of HDIL assets to repay dues of PMC Bank
- HDIL, its promoters have to repay loan to PMC Bank: Bombay HC
- PMC Bank scam: ED files charge-sheet against HDIL promoters
- Top PMC officials hid HDIL accounts from system: RBI to Bombay HC
- HDIL-PMC Bank scam: SC agrees to hear plea seeking measures to safeguard depositors’ money
- PMC Bank crisis: RBI enhances withdrawal limit to Rs 40,000
- PMC Bank created over 21,000 fake accounts, to hide defaults by HDIL: EOW
- HDIL crisis: 2 directors arrested, assets worth Rs 3,500 crores frozen, in PMC Bank scam case
The Mumbai Bench of the National Company Law Tribunal (NCLT) has directed the resolution professional (RP) of beleaguered property company Housing Development & Infrastructure (HDIL) to make available all relevant documents to the company’s promoters, who are currently lodged in Mumbai Arthur Road Jail on charges of fraud.
The insolvency tribunal has also directed the jail authorities to make arrangements, so that HDIL promoters Rakesh and Sarang Wadhawan are able to attend the committee of creditors (CoC) meetings via video-conferencing. “We believe that the applicants are entitled to the notices of the CoC meetings and to attend the meetings,” a division bench of Suchitra Kanuparthi and Shyam Babu Gautam said, in its 13-page order.
The order of the tribunal came after Subir Kumar, the counsel appearing for the Wadhawans, told the court that the father-son duo were not able to participate in the insolvency proceedings, as most of the notices were being sent to their email addresses. “The respondent has been sending the notice on the email addresses of the applicants of which they have no access and therefore, cannot be termed as legal and valid service,” Kumar told the two-member bench.
The bench, in 2019, admitted public lender Bank of Baroda’s insolvency plea against the Mumbai-based developer over non-payment of Rs 522 crores, under Section 7 of the Insolvency and Bankruptcy Code (IBC). Subsequently, Abhay Narayan Manudhane was appointed as the interim RP of the company in August 2019 over the Wadhawans’ alleged involvement the multi-crore Punjab and Maharashtra Cooperative (PMC) Bank scam.
After being named in an FIR filed by the Reserve Bank of India in over the fraud charges in the PMC Bank scam, the Wadhawans were arrested by the Economic Offences Wing (EOW) of Mumbai Police in October 2019. The father-son duo have been behind bars since then, as various government agencies probe the alleged charges.
In September 2020, the National Company Law Appellate Tribunal (NCLAT) ordered the liquidation of Guruashish Construction Pvt Ltd, a sister concern of debt-ridden HDIL, under the provisions of the IBC, while appointing Rajendra Bhuta as the IRP for the liquidation process. In 2017, the NCLT has admitted the insolvency pleas moved by Union Bank against the HDIL subsidiary over non-payment of Rs 250 crores debt.
(With inputs from Sunita Mishra)
EOW charges HDIL promoter Sarang in another fraud case
The Mumbai EOW is seeking custody of HDIL promoter Sarang Wadhwan, in an alleged fraud case, for taking advances worth Rs 131 crores from 456 home buyers, for a project in Goregaon
September 23, 2020: In a move that could further aggravate troubles for the beleaguered HDIL Group, the Mumbai branch of the Economic Offences Wing (EOW) is seeking custody of promoter Sarang Wadhwan, on charges of fraud involving a housing project in Goregaon. According to the agency, Sarang took advances to the tune of Rs 131 crores from 456 home buyers for a project named The Meadows and failed to deliver the same. HDIL has also been named in another fraud case. The company has been charged with duping government body MHADA in a Rs 1,032-crore fraud case.
HDIL promoters Sarang and Rakesh Wadhwan are currently lodged in Mumbai’s Arthur Road jail, over their involvement in the Rs 4,355-crore Punjab and Maharashtra Cooperative (PMC) Bank scam. The Mumbai branch of the National Company Law Tribunal (NCLT) has also admitted a plea by Bank of India, to launch insolvency proceedings against the Mumbai-based builder after it failed to repay dues of Rs 522 crores.
In the meantime, the Reserve Bank of India (RBI), on September 22, 2020, said it was yet to come up with a plan for the revival of PMC Bank. Exactly a year ago, the RBI suspended the board of PMC Bank after large-scale financial irregularities were reported in operations. The RBI also appointed AK Das as the new administrator of the bank, with effect from September 23.
(With inputs from Sunita Mishra)
PMC Bank scam fallout: Government introduces bill to strengthen cooperative banks
In a bid to avoid another PMC Bank-like scam, the government has introduced a bill that aims to bring cooperative banks under the RBI’s regulations
March 4, 2020: The government, on March 3, 2020, introduced a bill in the Lok Sabha, which seeks to protect the interest of small depositors by bringing cooperative banks under the Reserve Bank of India’s (RBI’s) regulations. Introducing the Banking Regulation (Amendment) Bill, finance minister Nirmala Sitharaman called the bill the ‘need of the hour’ to avoid a PMC Bank-like crisis in the future.
There are 1,540 cooperative banks with a depositor base of 8.60 crores, having total savings of about Rs 5 lakh crores. The proposed law seeks to enforce banking regulation guidelines of the RBI in cooperative banks, while administrative issues will still be guided by the Registrar of Cooperative.
The Bill proposes to bring cooperative banks on par with developments in the banking sector through better management and proper regulation of cooperative banks, with a view to ensure that affairs of cooperative banks are conducted in a manner that protects the interest of depositors, it said. It further proposes to strengthen cooperative banks by increasing professionalism, enabling access to capital, improving governance and ensuring sound banking through the RBI.
SC stays sale of HDIL assets to repay dues of PMC Bank
The Supreme Court has stayed a Bombay HC order that directed the sale of HDIL’s assets to repay its dues to PMC Bank
February 10, 2020: The Supreme Court, on February 7, 2020, stayed the Bombay High Court order directing sale of bankrupt Housing Development and Infrastructure Ltd (HDIL), to ensure repayment of dues of crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank. A bench comprising chief justice SA Bobde and justices BR Gavai and Surya Kant, took note of the appeal of the Reserve Bank of India against the Bombay High Court order. The top court also issued notice on RBI’s plea to parties, including Sarosh Damania, who had approached the Bombay High Court for ensuring payment of dues to PMC Bank account holders.
Earlier, the Bombay High Court had set up a three-member committee, for the valuation and sale of encumbered assets of HDIL, to expeditiously recover dues payable by the firm to PMC Bank.
PMC Bank scam: SC orders HDIL promoters to remain in jail
The Supreme Court has stayed a Bombay High Court order that allowed shifting of HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, to their residence
January 17, 2020: The Supreme Court, on January 16, 2020, partially stayed the Bombay High Court order allowing shifting of HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, accused in the multi-crore Punjab and Maharashtra Cooperative (PMC) Bank scam, from Mumbai’s Arthur Road Jail to their residence. A bench headed by chief justice SA Bobde took note of the submissions of solicitor general Tushar Mehta, appearing for the Enforcement Directorate, that he was assailing the high court order to the extent of allowing the release of two promoters from the prison and this needed to be stayed. Mehta told the bench that the father-son are presently lodged in Arthur Road Jail in judicial custody and if they are shifted to their residence as per the high court’s order, it would be like bail to them.
“Until further orders, there shall be a stay of the directions given by the (Bombay) High Court in paragraph 15 (xv) and (xvi) (which deals with release of accused from prison) of the impugned order dated January 15, 2020,” said the bench, which also comprised justices BR Gavai and Surya Kant. The law officer said the other aspects of the high court order such as sale of assets of the accused promoters under the supervision of high court appointed committee should be allowed to remain operative and the sole objection was with regard to their release from Arthur Road Jail.
Inspection report of scam-hit PMC Bank yet to be finalised: RBI
The inspection report on the financial position of the scam-hit Punjab and Maharashtra Co-operative Bank as on March 31 this year is yet to be finalised, the Reserve Bank of India has said.
December 30, 2019: The inspection report on the financial position of the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank as on March 31 this year is yet to be finalised, the Reserve Bank of India (RBI) has said.
Replying to an RTI query, it said preliminary findings RBI indicated large-scale irregularities in the bank, warranting supersession of its board of directors and imposition of all inclusive directions of the Banking Regulation Act, 1949.
“The inspection report is yet to be finalised as inspection of the bank with respect to its financial position as on March 31, 2019, is under progress,” the RBI said.
Based on the complaint vide letter dated September 17, wherein the complainant had alleged that the PMC Bank committed some irregularities, the RBI on September 19, 2019, commenced statutory inspection of the bank on its financial position as on March 31.
“In view of the ongoing investigation into the bank’s affairs by various authorities, an exemption is sought from disclosing the information under Section 8 (1) (g) and 8 (1) (h) of the Right to Information Act, 2005,” the RBI said.
Section 8 (1) (g) of the Act bars information “the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes”. The other section exempts disclosure of “information which would impede the process of investigation or apprehension or prosecution of offenders”.
The RBI was asked to share copies of complaints of any alleged irregularities in the PMC Bank and the action taken on each one of them. “We have received two complaints,” the Central bank said, without giving the details of the second complaint.
The multi-state co-operative bank has been under the RBI restriction since September 23, 2019, after the RBI had found financial irregularities, including huge under-reporting of loans and non-performing assets to real estate developer HDIL to the tune of Rs 6,500 crore, against its entire assets of Rs 8,880 crore, using hundreds of dummy accounts.
The RBI had sacked the board of the bank and appointed an administrator. The RBI said it had received complaints forwarded to it by the finance ministry for comments or direct reply to the complainants.
“We have so far not received any written communication from the finance ministry apart from complaints received by them forwarded to us for comments/direct reply to complainant,” it said.
HDIL, its promoters have to repay loan to PMC Bank: Bombay HC
A division bench of the Bombay High Court of justices Ranjit More and SP Tavade, on December 19, 2019, said that HDIL and its promoters Rakesh Wadhawan and Sarang Wadhawan have to repay the loan taken from Punjab and Maharashtra Cooperative (PMC) Bank. “You (HDIL) have taken a loan and you have to repay it. The assets must be sold at the earliest. This will be in the interest of the bank and its depositors,” the court said.
The bench was hearing a PIL filed by an advocate, Sarosh Damania, seeking directions for expeditious disposal of HDIL Group’s assets, attached by the EOW and the Enforcement Directorate (ED) and repaying depositors of the PMC Bank at the earliest. HDIL counsel Vikram Chaudhri told the court that the encumbered properties shall be sold first and if there was any shortfall, then, the unencumbered assets could be touched. “The liability to the bank as per the FIR lodged by the police’s Economic Offences Wing (EOW) is Rs 4,355 crores. The encumbered assets are valued at Rs 11,000 crores. It would be more than sufficient,” Chaudhri said. After hearing the arguments, the court reserved its judgment on Damania’s PIL.
No objection if HDIL properties are sold off, Wadhawan tells HC
HDIL managing director Sarang Wadhawan has told the Bombay HC that he has no objection to the sale of the realty group’s assets, to recover dues in the PMC Bank scam
December 19, 2019: HDIL managing director Sarang Wadhawan has told the Bombay High Court, on December 18, 2019 that he had no objection if the realty group’s assets were sold, for recovery of dues of the Punjab and Maharashtra Cooperative (PMC) Bank. “I have no objection if all encumbered properties are forthwith sold, for recovery of monies payable to the bank,” Sarang Wadhawan stated, in the affidavit.
Sarang Wadhawan filed the affidavit, in response to a public interest litigation filed by lawyer Sarosh Damania. The PIL sought quick disposal of HDIL Group’s assets, which have been attached by the Mumbai police’s Economic Offences Wing and the Enforcement Directorate (ED) and speedy return of the depositors’ money. The bench posted the matter for further hearing on December 19, 2019.
PMC Bank scam: ED files charge-sheet against HDIL promoters
The Enforcement Directorate has filed a charge-sheet against HDIL’s promoters, in connection with the Punjab and Maharashtra Cooperative (PMC) Bank scam
December 17, 2019: The Enforcement Directorate (ED), on December 16, 2019, filed a charge-sheet against Housing Development Infrastructure Ltd (HDIL) promoters Rakesh Wadhawan and Sarang Wadhawan, in connection with the multi-crore Punjab and Maharashtra Cooperative (PMC) Bank scam. The agency submitted its charge-sheet, running into around 7,000 pages, before a special court set up under the Prevention of Money Laundering Act (PMLA).
The Wadhawans have been booked under various provisions of the PMLA. The two were initially arrested by the Mumbai police’s Economic Offences Wing (EOW), which was probing the scam and later taken into custody by the ED, in October 2019.
PMC Bank scam: Court gives nod to sell two airplanes and a yacht belonging to HDIL
A court in Mumbai has allowed the RBI-appointed administrator for PMC Bank to sell two airplanes and a yacht belonging to HDIL Group firms owned by Rakesh Wadhawan and his son Sarang
November 28, 2019: Chief metropolitan magistrate RK Rajebhosale, on November 25, 2019, allowed the sale of two aircrafts and a yacht belonging to HDIL Group firms. The move comes, after the RBI-appointed administrator had moved the Mumbai court, seeking its direction to sell the movable assets attached by the probe agencies, in connection with the Rs 4,355-crore scam at the Punjab & Maharashtra Co-operative Bank (PMC Bank).
The administrator also submitted that mortgaged and hypothecated assets of the accused were inadequate to satisfy the loan along with the due interest. Accepting the argument, the court allowed the sale of two aircraft and one yacht. “Amount coming from the auction shall be credited to the loan account of the HDIL and its group companies,” the court said. The court also asked Mumbai Police’s Economic Offences Wing (EOW), which is probing the case, to make proper panchnama of the properties before auction and submit the same before the court.
Top PMC officials hid HDIL accounts from system: RBI to Bombay HC
Senior PMC Bank officials used hundreds of dummy loan accounts to hide transactions with HDIL and submitted fraudulent data to the RBI to conceal the loan sanctions, the central bank has told the Bombay HC
November 20, 2019: Senior officials of scam-hit Punjab and Maharashtra Cooperative (PMC) Bank used special codes, to hide hundreds of dummy loan accounts of HDIL, to which the bank had over 73% of its loan exposure, the Reserve Bank of India (RBI) informed the Bombay High Court, on November 19, 2019. “Senior officials of the PMC Bank had assigned certain specific access codes to the accounts belonging to HDIL and its group entities, which were used for assigning restricted visibility,” the RBI affidavit said. “Less than 25 of the 1,800 staff of the bank, could access these loan accounts. As a result, all the stressed HDIL Group accounts were omitted from the system,” it added. The RBI also informed the court that depositors of the bank can approach the RBI-appointed administrator, for withdrawal of up to Rs 1 lakh, in case of medical emergencies.
The arrested promoters of HDIL allegedly siphoned funds from PMC Bank by using overdraft facilities and the money was ‘disguised’ as loan accounts by bank officials, the Economic Offences Wing of the Mumbai Police had said earlier. The RBI further said the undisclosed loan accounts to the HDIL Group were sanctioned and renewed, with the approval of the bank’s now-suspended managing director Joy Thomas, who is behind the bars now along with the bank’s chairman, Wayram Singh. “These loan sanctions are not recorded in the minutes of loans committee, recovery committee and so on. PMC Bank submitted fraudulently manipulated data to the RBI for sample checks and the sample of accounts picked for inspection, did not contain the undisclosed HDIL related accounts,” the affidavit said.
HDIL-PMC Bank scam: Depositors protest outside RBI office seeking payback
Depositors of the PMC Bank held a protest outside an office of the Reserve Bank of India in Mumbai, demanding a payback of their stuck money
October 30, 2019: Harried depositors of the troubled Punjab and Maharashtra Cooperative (PMC) Bank continued with their protests, by agitating outside an office of the Reserve Bank of India (RBI) in Mumbai, on October 29, 2019, to demand a payback of their stuck money. A depositors’ delegation also met a chief general manager-rank officer after the protest in suburban Bandra-Kurla Complex (BKC) and submitted a memorandum.
The depositors, a majority of them senior citizens and women, gathered at the RBI building, which houses the offices of the chief general manager for cooperative banking regulation, with banners stating that it was a ‘black Diwali’, because of the PMC crisis. Later, a five member delegation went to meet senior RBI officials and submitted a memorandum. After its meeting with RBI officials, Jitshu Seth, one of the delegation members, said they requested the RBI to assure them that their money lying with the trouble-hit bank was safe. Another delegation member Harbans Singh said he will be filing a writ petition in the court, seeking payback for depositors by selling property worth over Rs 4,000 crores attached by the investigating agencies. Depositor Satish Thapar, who was among the protesters, said the bank can be revived, because the probing agency has attached more assets of the accused than the loans given.
HDIL-PMC Bank scam: HDIL promoters sent to judicial custody
HDIL promoters Rakesh Wadhawan and his son Sarang, arrested in connection with the Rs 4,355-crore PMC Bank scam, have been remanded to judicial custody
October 25, 2019: The Enforcement Directorate (ED), on October 24, 2019, produced Housing Development Infrastructure Ltd’s (HDIL’s) chairman and managing director Rakesh Wadhawan and his son Sarang Wadhawan before special Prevention of Money Laundering Act (PMLA) court judge P Rajvaidya, after their remand ended. The court remanded the duo in judicial custody, after the central agency did not seek their further custody.
HDIL-PMC Bank scam: Court extends HDIL promoters’ ED custody
A Mumbai court has extended the ED custody of HDIL promoters Rakesh Wadhawan and his son Sarang Wadhawan, arrested in connection with the PMC Bank scam, till October 24, 2019
October 23, 2019: The Enforcement Directorate (ED) produced Housing Development and Infrastructure Ltd’s (HDIL) chairman and managing director Rakesh Wadhawan and his son Sarang Wadhawan before special Prevention of Money Laundering Act court judge P Rajvaidya, after their remand ended, on October 22, 2019. It sought further custody of the father-son duo, to probe them further in connection with the Rs 4,355-crore Punjab and Maharashtra Cooperative (PMC) Bank scam.
The probing agency’s counsel Kavita Patil said the accused played a crucial role in laundering huge amount of money and were concealing material from investigation. The money trail of proceeds received from the bank and properties derived from the same, were yet to be ascertained, the ED said. The court extended the ED custody of the duo till October 24, 2019.
PMC Bank scam: SC refuses to entertain depositors’ plea for lifting restrictions on withdrawals
In a setback for account holders of scam-hit Punjab and Maharashtra Cooperative Bank, the Supreme Court has refused to entertain a plea that sought lifting of restrictions on cash withdrawals from the bank
October 18, 2019: The Supreme Court, on October 18, 2019, refused to entertain a plea filed on behalf of scam-hit Punjab and Maharashtra Cooperative (PMC) Bank account holders, seeking lifting of restrictions imposed by the Reserve Bank of India (RBI) on cash withdrawals. Advocate Shashank Sudhi, appearing for petitioner Bejon Kumar Mishra, said he filed the petition on behalf of 500 PMC Bank account holders.
A bench headed by chief justice of India Ranjan Gogoi said, “We are not inclined to entertain this petition under article 32 (writ jurisdiction). Petitioner can approach the high court concerned for appropriate relief.”
PMC Bank’s ex-director sent to police remand
In a related development, the Mumbai police’s Economic Offences Wing (EOW), which is probing the scam, told a court that the bank’s former director Surjit Singh Arora ‘abused his official position to facilitate the fraud’. Arora was, on October 17, 2019, produced before additional chief metropolitan magistrate SG Shaikh, who remanded him in police custody till October 22, 2019. Arora is the fifth accused to be arrested in the case.
The EOW said Arora was the director and key member of the loan committee of the bank until its affairs were taken over by the RBI. “Arora was elected on the directors’ body to ensure proper functioning of the bank. However, he abused his official position to facilitate the fraud,” it said. The court also remanded the bank’s former managing director Joy Thomas in 14-day judicial custody, after his police remand ended on October 17, 2019.
HDIL-PMC Bank scam: SC agrees to hear plea seeking measures to safeguard depositors’ money
The Supreme Court has agreed to hear a plea that has sought relief measures to safeguard the money of customers who have been hit by the HDIL-PMC Bank crisis
October 17, 2019: As crisis-hit PMC bank depositors intensified their protests, the Supreme Court has agreed to hear, on October 18, 2019, an urgent plea seeking directions for interim measures, to safeguard the money of customers blocked in the bank. The plea, on October 16, 2019, for the apex court to step in amid three deaths linked to the crisis in the Punjab and Maharashtra Cooperative(PMC) Bank, came even as the bank’s administrator met the RBI’s top brass including governor Shaktikanta Das and assured depositors that all efforts will be made to safeguard their interests.
The petition, filed by Delhi-based Bejon Kumar Misra, sought a direction for issuance of ‘exhaustive and comprehensive guideline’, to safeguard the banking and cooperative deposits in the eventuality of emergency financial crisis, where citizens are financially stranded by the acts of a few ‘unscrupulous persons’. It claimed the bank had 15 lakh depositors. The petition, has also sought quashing of the RBI notification restricting the limit of withdrawal of the deposits.
Probe agencies seek custody of top brass
In a related development, a Mumbai court remanded Housing Development and Infrastructure Ltd’s (HDIL’s) chairman and managing director Rakesh Wadhawan, his son Sarang Wadhawan and PMC Bank’s former chairman Waryam Singh to judicial custody till October 23, 2019, in connection with the scam. The Enforcement Directorate (ED) has also approached a special court for Prevention of Money Laundering Act (PMLA) cases, seeking the Wadhawans’ custody, for the probe into the money laundering case that the central agency has registered in the PMC Bank scam.
The Mumbai police also said that it will investigate how the Reserve Bank of India (RBI) audit missed various irregularities in the PMC Bank transactions. Mumbai police commissioner Sanjay Barve said the police are looking into why and how these irregularities in the functioning of the bank did not figure in the RBI’s forensic audit report. “In normal course, an audit by the RBI or cooperatives, should reveal such irregularities. We are looking into this aspect as to how and why the audits did not reveal these things,” he added.
HDIL promoters offer to sell assets, to repay dues
Meanwhile, the promoters of real estate group HDIL, Rakesh and Sarang Wadhawan, have requested the RBI and investigation agencies to sell off their assets, to pay off the bank’s dues. In a letter to the ED, the union Finance Ministry and the RBI, the Wadhawans requested that they be allowed to sell off 18 of their attached assets. The letter was released by a spokesperson of the Wadhawans. “It is in the larger public interest that the assets are disposed of, so as to mitigate the present situation,” said the letter.
PMC Bank crisis: RBI enhances withdrawal limit to Rs 40,000
While the RBI has moved to increase the withdrawal limit for PMC Bank’s customers to Rs 40,000 per account, the ED has said that it has seized and identified assets worth Rs 3,830 crores, in connection with its money laundering probe
October 15, 2019: In a development that is likely to provide relief to the customers of troubled Punjab and Maharashtra Cooperative (PMC) Bank, the Reserve Bank of India (RBI), on October 14, 2019, enhanced the withdrawal limit to Rs 40,000 per account, from Rs 25,000 per account earlier, for six months. With this relaxation, about 77% of the depositors of the bank will be able to withdraw their entire account balance, it said. This is the third time the regulator has increased the withdrawal limit, since it clamped down on PMC Bank on September 23, capping withdrawals at Rs 1,000 per customer, which led to a lot of distress and criticism. Finance minister Nirmala Sitharaman also said she is closely monitoring the developments at PMC Bank, while the RBI governor assured that customers’ interest would be protected.
Meanwhile, the Enforcement Directorate (ED) said that it was in the process of conducting valuation of a number of properties of Housing Development and Infrastructure Limited (HDIL), its directors, promoters, Punjab and Maharashtra Cooperative (PMC) Bank officials and others, as part of its investigation into the PMC Bank money laundering case. The assets, both immovable and movable, will be attached under provisions of the Prevention of Money Laundering Act (PMLA) after valuation, it said.
“The total value of movable and immovable assets seized, frozen and identified by the ED, being the proceeds of crime in this case, is more than Rs 3,830 crores, which does not include value of 80 unencumbered properties around Mumbai. Further probe is in progress, to identify and locate the balance proceeds of crime,” the ED said, in a statement.
The central agency said that raids conducted earlier, led to the recovery of ‘incriminating documents’ that revealed instances of siphoning of funds and their misuse. The seized and frozen assets include high-end cars, two aircrafts, jewellery, a speedboat, a yacht and fixed deposits. The agency said it has also identified a number of costly properties for attachment under the PMLA.
FM assures PMC depositors of necessary steps for better cooperative banks’ governance
The government has announced that it will set up a panel, which will recommend changes in the laws, if necessary, to prevent scams like the one at PMC Bank
October 11, 2019: Finance minister Nirmala Sitharaman, who faced angry depositors of scam-hit Punjab and Maharashtra Cooperative (PMC) Bank on October 10, 2019, announced the setting up of a panel to recommend legislative changes, to ensure better governance at cooperative banks. If necessary, the government will amend the laws governing cooperative banks in the winter session of parliament, she said at a press conference.
Sitharaman said a committee of secretaries of Economic Affairs and Financial Services, Rural Affairs and Urban Development ministries and a deputy governor of the RBI would be formed. Through this committee, the government intends to ‘understand and take necessary legislative steps, to prevent such things from happening in the future and empower the regulator better’, she said. Concerns exist about cooperative banks often becoming fiefdoms of politicians or other influential persons, giving a go-by to banking regulations and leading to soaring bad loans and putting in peril depositors’ money. Irate depositors gathered outside the BJP’s office in south Mumbai ahead of Sitharaman’s press conference. “Sixteen lakh depositors are in distress. What is our fault? You have got Rs 4,000 crores assets. Sell it and start the bank and then, go ahead with whatever action you want against the accused,” said Harbans Singh, a bank customer.
PMC Bank created over 21,000 fake accounts, to hide defaults by HDIL: EOW
Punjab and Maharashtra Cooperative Bank replaced 44 loan accounts of the HDIL Group, with over 21,000 fictitious loan accounts and thus camouflaged defaults by the Group, the EOW has informed
October 7, 2019: In the details of loan accounts submitted to the Reserve Bank of India for the year ended March 31, 2018, the Punjab and Maharashtra Cooperative (PMC) Bank replaced 44 loan accounts of HDIL and its group of companies, whose outstanding balance were significantly higher, with 21,049 fictitious loan accounts,” the Economic Offences Wing (EOW) of the Mumbai police said. The EOW disclosed the information, while seeking custody of chairman and managing director of Housing Development and Infrastructure Ltd (HDIL) Rakesh Wadhawan and his son Sarang. The court remanded them in police (EOW) custody till October 9, 2019.
These loans were not recorded in 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. The bank’s board of directors and executives, including managing director Joy Thomas, had ‘full knowledge’ of this act, it said Thomas was arrested on October 4, 2019. Through this forgery, bank officials ‘camouflaged’ the real loan accounts of defaulters (HDIL Group), the EOW said.
HDIL crisis: 2 directors arrested, assets worth Rs 3,500 crores frozen, in PMC Bank scam case
The Mumbai police has arrested two directors of HDIL in the Punjab and Maharashtra Cooperative Bank scam and also seized property worth Rs 3,500 crores of the company
October 4, 2019: A special investigation team of the Economic Offences Wing (EOW), on October 3, 2019, arrested two directors of Housing Development Infrastructure Limited (HDIL) – the chairman and managing director Rakesh Wadhawan and his son Sarang Wadhawan – for loan default in the Punjab and Maharashtra Cooperative (PMC) Bank scam, a senior official said. Both the accused were called by the EOW office to join the investigation, he said. During their inquiry, the police did not get satisfactory answers to specific questions, following which both were arrested, on the basis of certain facts which surfaced during the investigation, the official said.
Properties worth around Rs 3,500 crores, belonging to HDIL, have also been frozen by the EOW, he said. The police are collecting more information about the scam and interrogation of the arrested father-son duo is going on, he said. All those involved in this case will be called for a inquiry, he added. As many as 44 bank accounts of HDIL and associate companies have been identified, the official said. The corporate office of HDIL at Bandra and the Bhandup branch of PMC in Mumbai, were searched by the EOW, he said, adding that some important documents were seized.
Meanwhile, the ED, on October 4, 2019, raided six locations in Mumbai and its adjoining areas and registered a money-laundering case, to probe the alleged fraud in the PMC Bank case, officials said. They said the raids were being conducted, after a criminal complaint was filed under the Prevention of Money Laundering Act by the central agency. The raids are aimed at gathering additional evidence, ED sources said.
The EOW had registered an FIR, on September 30, 2019, against senior officials of HDIL and the PMC Bank for allegedly causing losses to the tune of Rs 4,355.43 crores to the bank. The FIR was filed under Section 409 (criminal breach of trust by a public servant or banker), 420 (cheating), and 465, 466 and 471 (related to forgery) of the Indian Penal Code along with 120 (b) (criminal conspiracy), he said.
HDIL crisis: Look out circular issued against MD, director
The government has issued a look out circular against two directors of realty firm HDIL, after preliminary findings allegedly revealed financial irregularities at the company
October 1, 2019: The government has issued a look out circular against real estate firm HDIL’s managing director Sarang Wadhawan and whole time director Rakesh Kumar Wadhawan, a senior official has revealed. The move follows a request by the Ministry of Corporate Affairs, which has been made operational by the Bureau of Immigration that comes under the Ministry of Home Affairs, the official added. Further, the official said the circular has been issued against the two directors, based on a preliminary report received from the field office of the Corporate Affairs Ministry. A look out circular is issued against a person, directing the immigration authorities to ensure that he or she does not leave India, through an airport or seaport.
HDIL is also embroiled in the crisis at Punjab and Maharashtra Cooperative (PMC) Bank, which has extended substantial amount of loans to the company. PMC’s exposure to HDIL Group is nearly 73% of its total loan book size of Rs 8,880 crores, as of September 19, 2019, a source had said, on September 29, 2019. In an alleged confession letter to the Reserve Bank of India (RBI), the bank’s suspended managing director Joy Thomas had accepted giving loans to realty developer HDIL and its related entity, to the tune of Rs 6,500 crores, without informing all the board members.
HDIL has also been dragged to the insolvency court, by Bank of India, for its failure to repay Rs 522 crores. On September 3, 2019, the National Company Law Appellate Tribunal (NCLAT) stayed the constitution of a committee of creditors, after HDIL filed a plea against the National Company Law Tribunal’s (NCLT’s) order, to commence insolvency proceedings against it. The company also faces resolution pleas under the Insolvency and Bankruptcy Code (IBC), filed by Syndicate Bank, Corporation Bank, Dena Bank and Indian Bank. In 2018, HDIL had settled bankruptcy petitions filed by Jammu & Kashmir Bank and Andhra Bank.
Currently, HDIL is developing various projects at Kurla, Nahur, Mulund and Palghar and has a residential portfolio of 86.22 lakh sq ft under construction. It has a land reserve of around 193 million sq ft, as on March 31, 2019, with 90% of its land reserves in the Mumbai Metropolitan Region (MMR), as per the 2018-19 annual report. Incorporated in 1996, Mumbai-based HDIL mainly focused on real estate development in the MMR, which included clearing slum land and rehabilitating slum dwellers. The main source of revenue of HDIL, for long, has been selling of development rights to other property developers, after developing the slum land. The company reported a revenue of Rs 601.20 crores in FY19 and a net profit of Rs 96.19 crores.