The administrator appointed to look after scam-hit Punjab and Maharashtra Cooperative Bank (PMC Bank) should initiate the process to auction assets seized under provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, and, in next two days, we will provide them the necessary no-objection certificate (NOC) from the court, says Sanjay Barve, commissioner of Mumbai police.
On Monday, the commissioner had called a meeting of PMC Bank depositors at his office. Mr Barve, told depositors, "According to our investigations, under statutory liquidity ratio (SLR) requirement PMC Bank has investment Rs3,000 crore, and properties worth over Rs4,000 crore have been seized so far. In addition, there is jewellery worth Rs90 crore, and luxury cars belonging to several accused in this case. During the next hearing on 13th November, we will request the court to issue the NOC for selling the seized properties. The administrator of the Bank should now initiate auction for the assets seized in this matter."
Rakesh and Sarang Wadhawan, promoters of Housing Development Infrastructure Ltd (HDIL) had given their consent to the auction, and the police would release all provisionally attached movable and immovable property, estimated to be worth over Rs3,500 crore.
"We are also probing auditors and directors of PMC Bank," Mr Barve, the police commissioner told the bank depositors. A forensic audit of PMC Bank has been commissioned by the Reserve Bank of India (RBI) through Grant Thornton, a leading global firm. Mr Barve said that the audit will be completed in the next 20 days and, based on its findings, the police will take necessary action.
The Mumbai police had already given in-principle NOC to the PMC Bank administrator. The administrator could carry out the planned auction after receiving NOC from the court, under provisions of the SARFAESI Act. The Act allows banks and financial institutions to sell properties of defaulters to recover loans.
On 23 September 2019, the RBI appointed JB Bhoria as the administrator of the scam-hit bank.
So far, the EOW (economic offences wing) had arrested five persons, including promoters of HDIL and bank's top management.
Meanwhile, according to The Tribune
, Daljit Singh Bal, an absconding director of fraud-hit PMC Bank, has been located in Amritsar in Punjab. Quoting sources, the report says, Mr Bal obtained anticipatory bail from a court in Amritsar on learning that a team from the EOW was on his way to nab him from the holy town. The local court granted him bail after Mr Bal gave an undertaking that he would surrender before the Mumbai police in a fortnight’s time. Mr Bal was on the loans committee at PMC Bank.
The EOW is still trying to locate another director, Gurnam Singh Hoti, who too is believed to be holed up in Punjab. Mr Hoti is also trustee of several Sikh institutions in Mumbai and supposedly helped collect deposits for the Bank from them.
The report says that the EOW is also looking to extradite one director Dr Parmeet Sodhi, who is in Canada. Dr Sodhi too was on the loans and recovery committees of PMC Bank. In its application before the magistrate in Chandigarh, last week, the EOW had said Dr Sodhi was responsible for sanctioning loans and was one of the directors responsible for the Bank’s operations.
Last month, the Enforcement Directorate (ED) had seized and identified movable and immovable assets worth more than Rs3,830 crore owned by HDIL, the company directors and promoters, as well as official of PMC Bank and others related entities in the fraud case.
So far, the ED has seized several movable and immovable assets in the PMC Bank fraud case. From HDIL promoters and directors, the ED has seized 10 cars, including a Rolls Royce, Bentley and Range Rover, of Rakesh Kumar Wadhawan.
It seized jewellery worth Rs66 crore from several residential premises, including that of Meena Rohra, who is business associate of Rakesh Kumar Wadhawan.
From the Alibag-based farmhouse of Wadhawans, the ED seized four vehicles, including an Audi,Toyota Fortuner, Innova and Mahindra Scorpio, three buggies, two Quadros (all terrain bikes) and a speed boat.
ED also froze fixed deposits (FDs) worth Rs1.50 crore belonging to the Wadhawans from several banks.
The agency identified two aircrafts, Bombardier Challenger 300 VT and Falcon 200 VT HDL, owned by Privilege Airways Pvt Ltd, where both Rakesh Kumar and Sarang Wadhawan are directors. These aircrafts have been kept in custody of Mumbai International Airport, the ED says.
Taking cognizance of the FIR filed into the matter by Mumbai Police's EOW, the ED had filed a money laundering case against HDIL promoters in the PMC Bank fraud case.
The agency also raided the premises of PMC Bank's former chairman Waryam Singh and former managing director Joy Thomas. The directors of the HDIL were arrested on 3 October 2019 by the Mumbai Police after they were found not cooperating with the sleuths.
It is alleged that HDIL, which is facing bankruptcy proceedings, and its group companies had taken huge loans from the PMC Bank. As many as 21,049 fictitious bank accounts were allegedly created to hide the loans which were disbursed in violation of RBI norms.
It has also been alleged that HDIL accounted for nearly 73% of the bank's total loans. Out of the Rs4,355 crore loans under the scanner, around Rs2,146 crore were transferred to accounts held by the Wadhawans. An account belonging to the Wadhawans had a balance of Rs2,009 crore on 31 August 2019, according to the FIR.
During the probe by the RBI, it was found that directors of PMC Bank had replaced 44 suspicious loan accounts with 20,149 fictitious bank accounts with low individual balances by tampering with bank software. The PMC Bank's former Managing Director (MD), Joy Thomas was allegedly behind the masking of the borrowers' accounts.
Meanwhile, according to reports, about 1,950 Sikhs from Maharashtra could not go to Gurudwara Darbar Sahib in Pakistan after opening of the Kartarpur Corridor due to financial crunch caused by the scam at PMC Bank.
According to a report from The Week
, Nearly 2,000 Sikhs from Mumbai, Nashik, Nanded, Navi Mumbai and Thane, most of whom have accounts in the PMC Bank, wanted to go on to the Gurdwara Darbar Sahib as part of the trip organised by local body Nirmaan Sevak Jattha. Hardev Singh Saini, member of a gurudwara committee in Kurla, was quoted in the report as saying, "We were in the process of submitting their details online on the required website, but suddenly due to the PMC Bank crisis many opted out. Of these 2,000 people, only about 50 could finally manage to go. All others dropped out due to lack of money because of the PMC Bank scam."
The PMC Bank has been put under restrictions by the RBI since September after an alleged Rs4,355 crore scam came to light, following which the deposit withdrawal was initially capped at Rs1,000, causing panic and distress among depositors. The withdrawal limit has been raised in a staggered manner to Rs50,000.
Founded in 1984 by S Gurcharan Singh Kochhar, in a small room in Mumbai, the bank had now grown to a network of 137 branches in six states and ranked among the top 10 cooperative banks in the country.
No application of due diligence procedures and bending to the diktat of directors with the vested interests in the debtor company are also indicative of intent to defraud. In such a case, the EoW of the Police should and must be included. The restitution of the defrauded amounts to the rightful owners and punishment to the culprits is well served by a diligent law enforcement.
In such instances as multiple offences commited by a party,eg PMLA violation and IT evasion. The right of the Bank should get the first priority over the rights of the State.