A chunk of PMC’s loans under probe linked to HDIL promoters, states FIR

MUMBAI: Nearly half of suspect loans of the Punjab & Maharashtra Co-operative Bank (PMC) were transferred into the accounts of the Wadhawans — Rakesh and Sarang — said the first information report (FIR) of the Mumbai Police. Sources added that the investigators fear this amount could have been laundered and through layered transactions diverted into foreign accounts held by the father-son promoters.
Loans amounting to Rs 4,635.6 crore (as on August 31, 2019) are under probe by the Mumbai Police at the PMC, and Rs 2,145.8 crore was transferred to the two Wadhawans, the FIR states.

While Rs 1,367.5 crore was granted to HDIL, the probe into the records of seven other accused ‘borrowers’ mentioned in the FIR (listed in the box) states that the account for the remaining loan of Rs 1,122.3 crore is linked to the HDIL group. The said firms have a common pool of directors. Five of them have their registered office in a slum rehabilitation authority (SRA) building developed by HDIL group located 69 metres from HDIL headquarters in Bandra, Mumbai. One is located in another SRA project of the group.

The complainant has alleged that the bank officials and the promoters of HDIL group ‘replaced’ 44 loan accounts whose individual outstanding was higher with 21,049 fictitious accounts with comparatively lower individual balance.

“These 21,049 fictitious accounts were actually not created in the core banking solution of the bank, instead they were mentioned in the advances master indent submitted to the RBI. By doing this with full knowledge of its banking executives including Thomas (former MD Joy Thomas), the bank had camouflaged the actual loan accounts of the defaulting borrowers to the detriment of the depositors interest,” adds the FIR. According to the FIR, the deposits as on March 31, 2019, stood at Rs 11,617.34 crore. This was done to present a rosy picture before the regulators.

“The bank in their regulatory reporting had understated the actual exposure of certain bad accounts which in normal course should have been disclosed and classified as NPAs. The bank while reporting to the RBI has suppressed information of certain actual loan accounts with huge exposure and surreptitiously replaced them with certain fictitious accounts. A sample of such suppressed loan accounts reveals that around Rs 4,355.46 crore (as on March 31, 2019) was involved in such an act of falsification,” states the FIR reviewed by ET.

When ET visited the Capri building, which houses five of the seven borrowing firms, the ‘office’ was locked. The residents told this reporter that the office is used by HDIL officials who visited occasionally.

When inquired about the directors and the firms, none of them had heard about them. “There are no rooms numbered 2, 5, 6 or companies you have named. The office belongs to HDIL and one Abhay of HDIL visits it frequently. The building is built by HDIL under a SRA project, while three floors are used by the builder, the slum tenants have been rehabilitated between 4th and 7th floors,” said a resident.

Interestingly, the office of the statutory auditors of HDIL, Thar & Co, is located on the second floor of Capri building. Thar & Co audited HDIL books until 2017. When contacted, Nimesh Thar refused to comment on the issue.

“My uncle used to audit HDIL and their group company but since 2017 they're not our clients,” Thar told ET. When asked about the seven firms and whether their premises were on rent, he refused to comment.

Queries sent to HDIL remained unanswered till press time Meanwhile, the Mumbai police on Tuesday carried out searches at HDIL headquarters and PMC’s Bhandup branch. The police have seized documents related to loan agreements, minutes of the meetings held, balance sheet of last five years and audit reports.

“The seized documents are being studied and summons to the accused will be issued after scrutinising the same,” said Rajvardhan Sinha, joint commissioner of Economic Offences Wing (EOW) Rajvardhan Sinha.


As a precautionary measure, the police have issued at least 17 lookout circulars in the matter including those against bank officials and HDIL promoters. The police are also probing an alleged conflict of interest between HDIL group and suspended chairman of the bank, Waryam Singh.

“Singh and HDIL have a long association. He was on its board between 2005 and 2015 and he quit the post to return as the chairman of the PMC Bank. Until September 2017, he also held over 1% stake in the realty firm. This clearly amounts to conflict of interest and the probe will ascertain an instance of quid pro quo, if any, for favouring HDIL and the other related firms. This will only strengthen the case of conspiracy filed by EOW,” said an official in know.

A team of the Enforcement Directorate (ED) visited the EOW office and is likely to register a money-laundering case after studying the documents.