PMC scam: RBI's role under scanner, says commissioner

Updated: Oct 17, 2019, 07:17 IST | Faizan Khan | Mumbai

As EOW call in Joy Thomas's second wife Yasmin Khan to record her statement, police boss Sanjay Barve assures depositors that central bank's alleged complicity will also be probed

Police chief Sanjay Barve (seated, in blue suit) interacts with PMC Bank depositors on Wednesday
Police chief Sanjay Barve (seated, in blue suit) interacts with PMC Bank depositors on Wednesday

The Economic Offences Wing (EOW) of Mumbai Police on Wednesday arrested one of the directors of the Punjab and Maharashtra Co-operative (PMC) Bank, S Surjit Singh Arora, 65, after his involvement in the scam surfaced during the investigation. According to sources, for the past four to five years, Arora received crores of rupees from the real-estate company HDIL. This is the fifth arrest in the case.

On the other hand, Mumbai Police Commissioner Sanjay Barve met 30 to 40 depositors at his office and assured them of a speedy investigation. "Financial transactions suggest that Arora received amounts running into crores from HDIL. He did not give satisfactory answers during questioning and as such had to be arrested. Apart from understanding the trail of money, we need to know if he is also a beneficiary in the scam," a senior officer told mid-day. The exact amount received by Arora would be clear once the forensic audit report comes.

PMC Bank director S Surjit Singh Arora
PMC Bank director S Surjit Singh Arora

Top cop meets depositors

On the other hand, Commissioner of Mumbai Police, Sanjay Barve met PMC Bank depositors on Wednesday and assured them of speedy justice. During the interaction, Barve told one of the depositors that the role of regulating bodies, including the Reserve Bank of India is under the scanner. The depositor had specifically asked him about the RBI's role.

Responding to queries over the role of auditors and why no action has been taken against the RBI, Barve said, "We are looking into why and how the auditors didn't notice the irregularities and how the entire scam went unnoticed despite the presence of regulating bodies, including the RBI."

Harbans Singh along with other protesters addresses the media after meeting the police commissioner on Wednesday. Pic/Sneha Kharabe
Harbans Singh along with other protesters addresses the media after meeting the police commissioner on Wednesday. Pic/Sneha Kharabe

PMC bank depositors from across the city visit the commissioner's office every day. Barve added that property worth 80% of the scam has been attached. He added that he is in touch with the RBI-appointed administrator to bring the case to a conclusive end.

"We understand that people have lost their hard-earned money, their businesses are suffering. And that withdrawal limit of R40,000 is not enough, but we are doing our best," he said. In addition, Lookout Circulars have been issued against all other PMC directors to prevent them from fleeing.

Yasmin Khan records statement

The Special Investigation Team (SIT) of the EOW also recorded the statement of Yasmin Khan, 42, for several hours. PMC Bank chief Joy Thomas married Khan in 2005 by converting to Islam, when he also changed his name to Junaid Khan. "We have recorded her statement and she has been asked to be present before the investigating officer whenever required," an officer said.

Thomas purchased several properties jointly named after him and his wife. These may be seized by probe agencies. According to sources, Khan came with several documents related to nine flats and a boutique. Her statement is going to lead to Thomas being questioned about a property in Pune. However, the SIT is not entirely satisfied with her statement so far.

ED seeks Wadhawans' custody

The Enforcement Directorate (ED) on Wednesday sought custody of other accused Waryam Singh, Sarang Wadhawan, and Rakesh Wadhawan who are in judicial custody till October 23. An application was moved before the PMLA court.

80 per cent
Proportion of the scam for which property has been seized

HDIL wants to sell assets to repay loans

HDIL promoters Rakesh and Sarang Wadhawan, through a letter dated October 16, have requested agencies to sell off their attached assets and start repaying PMC Bank loans. The promoters wrote to ED, EOW, Ministry of Finance, Reserve Bank of India's Governor and Deputy Governor on Wednesday. The promoters denied all accusations of wrongdoing and gave "unconditional consent for the appropriation of the money received from the sale of assets". The ED has attached assets such as private aircraft, yachts, and several luxury cars.

SC to hear plea on interim measures

The Supreme Court will, on Friday, hear a plea seeking directions for interim protective measures to insure around 15 lakh customers whose money is blocked in PMC Bank. The plea, filed by Delhi-based Bejon Kumar Misra, said the Centre and RBI should be directed to ensure complete insulation and insurance of deposited money in co-operative and nationalised banks, by enacting an appropriate measure of 100 per cent insurance coverage of deposited amount.

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  • 1/13

    The ongoing Rs 4,355-crore Punjab-Maharashtra Cooperative (PMC) bank fraud has left many people in lurch, as the Reserve Bank of India (RBI) placed directions on the bank, and account holders could not withdraw their money. The scam unfolded after the bank's former MD Joy Thomas and chairman Waryam Singh were taken into custody by the Economic Offences Wing (EOW), unearthing its nexus with the real estate development company HDIL. Here's how the case unfolded. Pic/Suresh KK

  • 2/13

    On September 23, the RBI putting restrictions on the bank, enabling account holders to withdraw not more than Rs 1000 for six months. The bank was directed to not renew existing loans or sanction new ones. This decision threw consumers into a frenzy, as they queued up outside the bank’s ATMs, demanding their money. Pic/Sameer Markande

  • 3/13

    Customers lined up outside the banks to withdraw their money and filed complaints against top officials, while the bank’s suspended MD Joy Thomas assured them that their money was safe.

  • 4/13

    Several government employees have their salary accounts in the PMC bank. The Central Railway (CR) sent a letter to the divisional railway manager and asked them to pay employees through cheques. Meanwhile, on September 26, RBI increased the withdrawal amount to Rs 10,000. Pic/Suresh Karkera

  • 5/13

    On September 27, Joy Thomas said the bank had approached the Reserve Bank of India (RBI) on September 19 to seek help to regularise unclassified loans worth Rs 2,500 crore for the past seven years.

  • 6/13

    On September 30, a first information report (FIR) was registered against Thomas, the bank’s former chairman Waryam Singh and other directors of PMC bank, along with HDIL directors Rakesh and Sarang Wadhawan. The FIR mentions that loans granted to the HDIL group and others during 2008-2019 were not paid back. Pic/PTI

  • 7/13

    EOW arrested Rakesh and Sarang Wadhwan on October 2 for allegedly siphoning off Rs 6,500 crore in unreturned loans via several dummy accounts, former PMC MD Thomas on October 3 and former chairman Waryam Singh on October 4.

  • 8/13

    On October 3, the RBI also increased the withdrawal limits for depositors to Rs 25,000 from Rs 10,000 over the next six months. Pic/PTI

  • 9/13

    EOW said Singh played an important role in the fraud, as he was not only the PMC bank chairman, but also an HDIL executive director at the same time. However, the decisions were taken by Thomas. Pic/Ashish Raje

  • 10/13

    EOW also searched residences of Waryam Singh and froze his DMAT account worth Rs 100 crore. Besides these, properties of HDIL worth Rs 3500 crore were also provisionally attached by the agency. Further raids found that HDIL directors Rakesh Kumar Wadhawan and his son Sarang Wadhawan have a property of over 2.5 acres in Alibaug. Pic/Faizan Khan

  • 11/13

    Preliminary investigation indicates that a few PMC employees have tampered with the bank's software, owing to which 44 accounts mentioned in the FIR did not reflect in the banking system. On October 10, finance minister Nirmala Sitharaman met the customers of the bank. Pic/PTI

  • 12/13

    The scam took a political turn where further raids on October 11 found that HDIL promoters gifted several flats and commercial spaces in Kaledonia, in Andheri (East), to families and friends of politicians holding portfolios in the central as well as the state government. Meanwhile, consumers have been protesting outside the court where the culprits are being tried. 

  • 13/13

    Sources exclusively told mid-day that EOW has discovered that Thomas had operated under another identity – of Junaid Khan – which was used to purchase 10 properties, according to ANI. He converted to Islam and married his assistant as per Islamic rituals in 2012. Investigating agencies also found documents that suggest he had several investments under that name as well as his second wife. Thomas' second wife is said to own nine flats in Pune and a boutique. Meanwhile, a Mumbai court on Monday sent Waryam Singh and HDIL promoters Rakesh Wadhawan and Sarang Wadhawan to police custody till October 16.

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