PMC Bank Scam: RBI to Sell Attached Assets worth Rs3,500 crore, says Report
Moneylife Digital Team 31 October 2019
The administrator appointed by Reserve Bank of India (RBI) on scam-hit Punjab & Maharashtra Cooperative (PMC) Bank has asked permission form economic offences wing (EOW) of Mumbai police to sell attached properties of Housing Development Infrastructure Ltd (HDIL) and the company promoters, says a report.
 
In the report, the Economic Times says, the city police will soon seek court approval to hand over the assets to the RBI administrator. Confirming the developments, EOW chief Rajvardhan Sinha told the newspaper, "We have received a communique from the RBI asking us to de-attach the properties in the PMC case. We have given them an in-principle no-objection certificate."
 
HDIL promoters Rakesh and Sarang Wadhawan had given their consent to the auction, and the police will approach the competent court by the end of this week to release all provisionally attached movable and immovable property, estimated to be worth over Rs3,500 crore, the newspaper says. 
 
The planned auction will be carried out under provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, 2002, which allows banks and financial institutions to sell properties of defaulters to recover loans, the ET report says quoting two people with knowledge of the matter.
 
In a tweet, Kirit Somaiya, former member of Parliament (MP) and vice president of Bharatiya Janata Party (BJP)'s Maharashtra unit, says the process to auction free properties of HDIL worth Rs4,000 crore under the SARFAESI Act, has started.
 
 
Meanwhile depositors are continuing to hold protests, trying to meet politicians and senior officials from the RBI. However, the RBI has refused to provide any answer so far, even while it has appointed Grant Thornton to conduct a forensic audit.
 
Earlier this month, the Enforcement Directorate (ED) had seized and identified movable and immovable assets worth more than Rs3,830 crores owned by HDIL, the company directors and promoters, as well as officials of PMC Bank and others related entities in the fraud case.
 
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 Reserve Bank of India, 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 Joy Thomas was allegedly behind the masking of the borrowers' accounts.
 
On 24 September 2019, the RBI imposed strict restrictions on the Mumbai-based PMC Bank sending sent shock waves in Mumbai’s banking and business circles since the Bank used to be considered very ethical and was known for its high service quality.
 
Founded in 1984 by S Gurcharan Singh Kochhar, in a small room in Mumbai, it had now grown to a network of 137 branches in six states and ranks among the top 10 cooperative banks in the country.
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