The complaint, filed Monday with the Economic Offenses Wing (EOW) of the Mumbai police and later examined by Reuters, accuses the bank’s management of concealing non-performing assets and disbursing loans resulting in a loss of at least 43.55 billion rupees ($ 616.5 million).
A single real estate company and companies in its group have received 44 loans, according to the complaint.
“The bank’s actual financial situation was covered up and the bank deceptively reflected a rosy picture of its financial parameters,” the complaint said, noting that the fictitious loan accounts had not entered the banking system of base of the bank – a key factor in the commission of a $ 2 billion fraud at the Punjab National Bank PNBK.NS which was discovered in 2018.
The complaint names bank chairman Waryam Singh and chief executive officer Joy Thomas, as well as other bank officials, and charges them with breach of trust, forgery and falsification of documents.
He also appoints the bankrupt real estate company Housing Development and Infrastructure Ltd HDIL.NS, as well as its former senior executives Sarang Wadhwan and Rakesh Wadhwan, beneficiaries of the loans.
A senior government official said on Tuesday evening that the Serious Fraud Investigation Bureau would look into HDIL’s alleged wrongdoing in the PMC case, planning to complete the investigation within the next two months.
PMC and HDIL did not immediately respond to requests for comment. The Reserve Bank of India (RBI) said it had no comment.
The PMC case has raised new concerns about the health of India’s ailing banking sector, which has been rocked by multibillion dollar fraud at a state lender, the collapse of a major lender d infrastructure, bad debt problems at state banks and a liquidity crunch that hit shadow lenders.
More than two dozen cooperative banks are now administered by the RBI, but PMC Bank – with deposits of Rs 116.2 billion as of March 31 – is by far the largest.
PROTEST BY DEPOSITORS
The RBI last week decided to take over PMC, one of India’s top five cooperative lenders with more than 900,000 depositors, and suspended Thomas and the bank’s board after discovering loan irregularities.
The RBI has banned the bank from renewing or granting loans or making investments without prior central bank approval, while depositors have been told they can only withdraw a maximum of 10,000 Rupees ($ 140) from their PMC accounts over the next six months. [L3N26G2L2]
Dozens of account holders gathered outside an RBI office in Mumbai on Tuesday to protest the restrictions and demand that the central bank and government intervene to release their funds.
In a letter Thomas wrote to the RBI that allegedly blew the lid off the scam, he says he oversaw the fraud and withheld details from the regulator for fear of reputational risk to the bank. Reuters reviewed a copy of the letter.
The police complaint against PMC and HDIL officials was filed at the behest of an administrator, whom the RBI appointed last week to oversee the bank’s operations.
The complaint alleges that PMC officials misled the RBI for more than a decade, from 2008 to August 2019 by failing to disclose large accounts that had become non-performing assets by producing false audit reports.
Indian media reported on Sunday that PMC’s exposure to the bankrupt HDIL stood at Rs 65 billion, representing 73% of its overall loan portfolio of 88.8 billion – well above the levels of RBI authorized exposure to a single entity.
Additional reports Manoj Kumar; Editing by Kirsten Donovan