PMC officials tried to shield HDIL, HC told
MUMBAI: An annual inspection of crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank has revealed that some bank officials had tampered with the lender’s core banking system to hide fraudulent loan accounts of real estate developer Housing Development and Infrastructure Limited (HDIL), the Reserve Bank of India (RBI) told the Bombay high court in an affidavit on Tuesday.
The banking regulator said access codes were given to “problematic accounts” to ensure “restricted visibility”, and these accounts could be accessed only by 25 of the bank’s 800 employees. The Reserve Bank of India (RBI) said the HDIL group loan accounts were excluded from system’s identification of non-performing assets (NPAS) and also did not reflect in the loan account display system of the multi-state cooperative bank.
The affidavit was filed in reply to a bunch of petitions over the fraud at the bank and a moratorium imposed by the Reserve Bank of India (RBI) on withdrawals from the bank.
While the Consumer Action Network challenged the moratorium, other petitions were filed mostly by individuals, raising personal grievances.
The fraud came to light when, in September, the Reserve Bank of India (RBI) clamped regulatory restriction on the urban cooperative bank after it discovered financial irregularities, including hiding and misreporting of loans given to HDIL. It superseded the board and the management of the bank and appointed an EX-RBI official as the administrator at the bank.
Since the crisis, the agencies have arrested five people including HDIL promoters Rakesh Wadhawan and his son Sarang.
HDIL owes more than ~6,500 crore to the bank.
The RBI affidavit stated that loans were sanctioned to HDIL group companies by then managing director K Joy Thomas on his own, and found no mention in the minutes of the loan committee, recovery committee or board of directors, a vital source of information for statutory inspections.
The affidavit said that in order to adjust its balance sheet, the bank created 21,049 fictitious accounts so the master data could tally with loan disbursals of ₹7,457.49 crore.
The petitioners alleged the Reserve Bank of India (RBI) failed to monitor functioning of the bank, but was now penalising depositors by imposing curbs.