PMC bank scam: Director, two others arrested

Updated: Mar 13, 2020, 15:39 IST | Faizan Khan | Mumbai

The agency has revealed before the court that they gave an overvalued Captial Adequacy Ratio (CAR) report of the bank to RBI.

Vishwanathan Prabhu
Vishwanathan Prabhu

The Economic Offences Wing of Mumbai Police arrested the director of one of the leading valuing firm, Yardi Prabhu Consultants and valuers. Vishwanathan Prabhu and one of his employees, Shripad Jere were arrested in Punjab and Maharashtra Cooperative Bank fraud case for allegedly over-valuing the properties of PMC Bank to manipulate the balance sheet, mortgage properties of borrowers including HDIL group, in order to increase the capital adequacy of the bank for showing healthy balance sheet to Reserve Bank of India (RBI).

Along with this valuers, the investigating agency also arrested another former PMC bank director Jasvinder Singh Banwait, who was also a member of loan, investment and executive committee of the bank.

According to EOW, both the accused were impanelled valuers of PMC bank. These valuers over- evaluated many properties of HDIL which were kept as a mortgage with the bank. HDIL's Saphire group got a Rs 10 crore loan from PMC. HDIL kept the property as a mortgage which was initially evaluated to be Rs 3.5 crore by these accused valuers. Later, as the property's value was not sufficient for a Rs 10 crore loan, so the valuers over-evaluated the property from Rs 3.5 crore to Rs 7 crore and by the time the loan had been granted. The agency has also found in their investigation that they overvalued a flat of one of the former directors of the PMC bank who then got a loan against this overvalued flat.

The agency has revealed before the court that they gave an overvalued Captial Adequacy Ratio (CAR) report of the bank to RBI.

RBI tracks the CAR of a bank to ensure that the bank can absorb a reasonable amount of loss

"We suspect that because these overvalued CAR of the bank, RBI couldn't judge the loss the bank was facing and the risk which was involved." an officer said.

These valuers were called by investigation officer during the early stage of the investigation but there was no evidence found against them. The accused also claimed that they never met Joy Thomas, while the PMC bank employees told the officer that these valuers used to visit the bank frequently to meet Joy Thomas. "My team has conducted a thorough inquiry before arresting these valuers of the bank." confirming their arrest said Rajvardhan, joint commissioner EOW.

EOW believes that these accused valuers connived with Joy Thomas (Former MD of PMC) and Waryam Singh (former director PMC) and overvalued bank's properties and furnished reports as per the Joy Thomas and Waryam Singh had desired.

During interrogation, it was revealed that in 2012, PMC bank had to revalue its properties. The bank is required to have a Capital Adequacy Ratio (CAR) of at least 12 per cent, but PMC's CAR was only 10.99 per cent in 2012. So, these accused valuers overvalued bank's properties to show a healthy balance sheet.

Again, in 2015, when the bank was facing low CAR (10.75 per cent), accused again overvalued bank's properties to manipulate the balance sheet and show a CAR of 12 per cent. The accused did this after a meeting with Joy Thomas at PMC's Bhandup office. The accused showed a CAR of 12.43 per cent of the bank.

In June 2018, a relative of a former director of PMC applied for a Rs 1.30 crore loan. This loan was granted against a flat located in Mumbai's Kurla area. The actual worth of the flat was Rs 69.02 lakh but the accused valuers showed it to be Rs 1.34 cr. But as per the guidelines, the loan can be only 80% of the mortgaged properties' value, so the valuers once again overvalued the flat and showed it to of Rs 1.62 cr and the loan was granted.

"The accused have been produced before the court and has been remanded to police custody till 16th of March, further investigations are underway." Shrikant Paropkari, DCP EOW.

So far, the agency have arrested 15 accused in the ongoing investigation of PMC bank fraud case and has filed two charge sheet against 12 accused, the agency likely to file final charge sheet in the matter by end of March.

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