Housing Development and Infrastructure Limited (HDIL) directors Rakesh and Sarang Wadhawan, accused of loan default, in connection with the Punjab and Maharashtra Co-operative (PMC) Bank scam have been sent to police custody till October 9. Rakesh and Sarang Wadhawan were arrested by police on Thursday. Police have also frozen their assets.
According to the FIR registered against them, they had taken a loan worth Rs 3,337 crore from the PMC bank which later turned into NPA. Few of the senior bank officials, including directors of the PMC bank were also involved in the fraud.
Before taking them into the custody, Mumbai police's Economic Offences Wing slueths had interrogated them. This is the first arrest in the mega PMC bank scam case.
On Monday, the police had filed an FIR against the former bank management and promoters of HDIL and formed a Special Investigation Team (SIT) to probe the case.
Based on a complaint by RBI-appointed administrator, the city police's Economic Offences Wing filed a first information report (FIR) in the case for forgery, cheating and criminal conspiracy against the officials. As per initial investigations, the bank's losses since 2008 were Rs 4,355.46 crore, the police said.
The bank's former chairman Waryam Singh, managing director Joy Thomas and other senior officials, along with the directors of HDIL had been named in the FIR.
Explaining the modus operandi of the case, the FIR said HDIL promoters allegedly colluded with the bank management, to draw loans from the bank's Bhandup branch. Despite non-payment, the bank officials did not classify the loans as non performing advances and intentionally hid the information about the same from RBI.
They also created fictitious accounts of companies which borrowed small sums of money, and created fake reports of the bank to hide from the regulatory supervision, it said.
The FIR has been filed under sections 409 (criminal breach of trust by a public servant or banker), 420 (cheating), and 465, 466 and 471 (related to forgery) of the Indian Penal Code along with 120 (b) (criminal conspiracy).
The bank, which has 137 branches and over Rs 11,000 crore in deposits, has been put under restrictions since last week after the RBI discovered certain financial irregularities in the functioning of the multi-state lender.