Did the Reserve Bank of India, during its inspection in 2014-15, miss out on the crucial aspects of the loans extended to Housing Development and Infrastructure Ltd by Punjab and Maharashtra Cooperative Bank (PMC Bank)?
According to a report in Moneylife, an inspection carried out by RBI “failed to find out that the HDIL group accounted for over half of the Bank’s business making it a captive bank of the realty group”
Instead, the inspector flagged issues in the way PMC Bank was functioning. “A serious flaw detected in the credit policy was the fact that the cash-credit limits were sanctioned for three years at a stretch and were not subject to an annual review as envisaged (in RBI’s master circular)”, the inspector said in his report, according to Moneylife.
The inspector further said, “Credit appraisal and post-disbursement supervision in the Bank needed improvement,” and the Bank did not obtain “statutory dues certificates from borrowers, certified by their auditors and commenting on the loan proposal before sanctioning cash-credit limits.”
The inspector’s report was accessed by activist Girish Mittal through a Right to Information (RTI) application.
It is not known yet whether RBI’s subsequent inspections catch the loans given to HDIL.
The disclosures made by Joy Thomas, former Managing Director at PMC Bank, shows how various dubious transactions in the bank were kept hidden since 2008. The accounts were managed in a way that neither the statutory auditors nor the periodical scrutiny by the Reserve Bank of India were able to catch the ongoings at the bank.
ALSO READ: How the PMC Bank scam was kept hidden for many years
The Economic Offences Wing (EOW) of the Mumbai Police has identified Waryam Singh, former Chairman of the PMC as the key entity in keeping the fraud under cover. It further stated that the case was registered on the complaint of Jasbir Singh Matta, Manager (Recovery Cell of Punjab & Maharashtra bank Co-op. Bank Ltd. against Joy Tomas, Managing Director of PMC Bank, & other officials of PMC bank, Waryam Singh, Director of PMC Bank along with other directors, Sarang Wadhwan, Rakesh Wadhwan & other executives of Housing Development and Infrastructure Limited (HDIL) and its group companies and other unknown persons for causing huge loss to the tune of Rs.4,335.46 crore to PMC Bank by committing various criminal acts.
ALSO READ: PMC Bank scam: Former Chairman Waryam Singh key player in fraud, says Mumbai police