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Ex-MD of PMC Bank arrested; ED conducts raids

October 04, 2019 20:15 IST

Property of Rs 3,500 crore belonging to the company was seized by the EOW, a police official said.

Former managing director of Punjab and Maharashtra Cooperative Bank, Joy Thomas, was arrested on Friday by the Economic Offences Wing of Mumbai police in connection with the alleged Rs 4,355 crore scam at the bank.

The Enforcement Directorate also conducted raids at six locations in and around Mumbai after taking cognisance of the FIR registered by the EOW.

 

Seeking to allay fears about the health of the banking system, the RBI said there was no reason to panic, but it would review the regulatory framework for cooperative banks.

In Mumbai, Thomas was summoned to the EOW office and arrested after questioning, a police official said.

On Thursday, the EOW had arrested chairman and managing director of Housing Development and Infrastructure Ltd (HDIL) Rakesh Wadhawan and his son Sarang in the case.

A court sent them in police custody till October 9 on Friday.

The EOW registered an FIR on Monday against senior officials of HDIL and PMC Bank for allegedly causing losses to the tune of Rs 4,355.43 crore to the bank.

Property of Rs 3,500 crore belonging to the company was seized by the EOW, a police official said.

On Friday, the Enforcement Directorate raided six places in Mumbai and adjoining areas and registered a money-laundering case based on the FIR filed by the EOW in the PMC Bank case.

Based on a complaint filed by the RBI-appointed administrator of the bank, the EOW has registered the First Information Report under IPC sections 409 (criminal breach of trust by a banker), 420 (cheating), and 465, 466 and 471 (related to forgery) along with 120 (b) (criminal conspiracy).

The FIR named former PMC Bank chairman Waryam Singh, Thomas and other senior officials, besides the Wadhawan duo.

HDIL promoters allegedly colluded with the bank management to take loans from the its Bhandup branch in Mumbai, the FIR said.

Despite non-payment, bank officials allegedly did not classify these loans as non performing advances, and hid the information from the RBI.

They also allegedly created fictitious accounts of companies which were showed to have borrowed small sums of money and created fake reports to hide from regulatory supervision, the police said.

The bank, which has 137 branches and over Rs 11,000 crore in deposits, was put under restrictions last week after the RBI discovered financial irregularities.

According to sources, overall exposure of the bank to the financially stressed HDIL group is around Rs 6,500 crore or over 73 per cent of its advances, and all of it is not being serviced.

The Reserve Bank said on Friday that there was no reason to panic about the overall banking sector.

RBI governor Shaktikanta Das said the entire banking system is sound and stable. However, in the wake of the crisis at PMC Bank, the RBI is reviewing the regulatory framework for cooperative banks, he said.

Photograph: PTI Photo

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