PMC Bank used more than 21,000 fake accounts to hide loans: Report

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PMC Bank Crisis: Week after RBI's restriction on Punjab and Maharashtra Co-Operative (PMC) Bank from doing "any kind of business' and put a limit on cash withdrawals by depositors, a shocking detail has emerged. 

According to a report in Times of India, PMC Bank used more than 21,000 fake accounts to hide loans it made, as per a police complaint filed by Indian officials, in the latest bank fraud case.

The complaint was filed with Mumbai's Police's Economic Offences Wing (EWO) on Monday. The complainant accuses bank's management of concealing non-performing assets and disbursing loans leading to a loss of at least Rs 4,355 crore ($616.5 million).

According to reports, a single realty firm and its group companies were the beneficiaries of 44 loans.

“The actual financial position of the bank was camouflaged, & the bank deceptively reflected a rosy picture of its financial parameters,” said the complaint.

The complaint names PMC Bank’s chairman Waryam Singh and its managing director Joy Thomas, along with other bank officials and accuses them of criminal breach of trust, forgery and falsification of records, TOI reports.

Also, the complaint named bankrupt realty company Housing Development and Infrastructure Ltd (HDIL), along with its former senior executives Sarang Wadhwan and Rakesh Wadhwan, who were beneficiaries of the loans, issued on those fake accounts.

It also noted that the fake loan accounts were not entered into the bank’s core banking system, notably, which was the factor key in the perpetration of a $2 billion fraud at Punjab National Bank that was uncovered in 2018.

 
RBI imposed a restriction on PMC Bank under Sub-section (1) of Section 35A of the Banking Regulation Act for violating of various regulations. However, RBI did not cancel the licence of PMC Bank. 

The PMC Bank has been barred from granting, renewing and loans and advances, make any investments, accept fresh deposits, etc, without the prior written approval from RBI.

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