Mumbai: The promoters of the bankrupt reality firm Housing Development and Infrastructure Limited -- Rakesh Wadhwan and son Sarang – were arrested by the Mumbai police Economic Offences Wing on Thursday in connection with the multi-crore fraud in the Punjab and Maharashtra Co-operative (PMC) bank.
The father-son duo, who have been charged with cheating, fraud, falsification of accounts and criminal conspiracy, had collectively caused losses to the popular co-operative bank in connivance with some employees and members of the bank's board of directors. The losses to the bank are pegged at Rs 4355.46 crore.
A senior EOW official said that the duo was called for questioning on Thursday morning and their arrest became necessary as "they were not cooperating in the probe." "We will seek their custodial remand in the court on Friday," the official said.
Side by side, the EOW has provisionally attached assets worth Rs 3,500 crore belonging to the HDIL group and affiliates.
"These assets include land parcels, residential and commercial projects scattered across Mumbai and in adjoining areas," EOW sources said. The documents related to the properties were found during the swoop on the PMC’s main office at Bhandup on Tuesday.
"These properties were pledged as collaterals in the PMC bank against money borrowed by HDIL and its affiliate firms," sources said, adding that the EOW has begun the process of ascertaining the title of these properties, before moving court for their seizure.
"We have obtained the property documents. Our field assessment would reveal their status as well as their actual ownership," sources said, while raising suspicion that the same could have been pledged to other banks for obtaining loans; or they could just be fakes.
Ousted Managing Director of PMC bank, Joy Thomas, had admitted before the RBI that the total exposure of the bank to HDIL was around Rs 6,600 crore.
That accounted for an astronomical 73 per cent of the bank’s total assets of about Rs 8,800 crore, which was a clear violation of the regulatory norms fixed by the RBI.
The massive non-refund lending to a single entity, which was not cited as NPA during successive audits, had driven the bank to the brink of bankruptcy, hastening the RBI’s intervention.
Panic spread amongst depositors when on September 23 the central bank clamped restrictions on withdrawals (up to Rs 1,000) which was later raised to Rs 10,000.
By Debasish Panigrahi