The Economic Offences Wing on Wednesday stated that Jasvinder Singh Banwait, one of the directors of Punjab and Maharashtra Cooperative (PMC) Bank, Vishwanatha Shridhar Prabhu and Shripad Govind - valuers of PMC Bank has been arrested. The press note stated that the arrest was made after interrogation, as they "provided unsatisfactory and unconvincing explanations."
Earlier, the top court had stayed the Bombay High Court order directing sale of bankrupt Housing Development and Infrastructure Ltd (HDIL) to ensure repayment of dues of crisis-hit Punjab and Maharashtra Cooperative Bank. Prior to this, it had also partially stayed the high court's order allowing shifting the Wadhawans from Mumbai's Arthur Road Jail to their residence. The Bombay High Court had set up a three-member committee for valuation and sale of encumbered assets of HDIL to expeditiously recover dues payable by the firm to PMC Bank.
The high court had passed the order while hearing a PIL seeking direction for expeditious disposal of HDIL assets and properties attached by the Economic Offence Wing and the Enforcement Directorate and repaying PMC Bank depositors at the earliest. The fraud at PMC Bank came to light in September last year after the Reserve Bank of India discovered that it had allegedly created fictitious accounts to hide over Rs 4,355 crore of loans extended to HDIL.
On September 21, the RBI took control of the government-run PMC Bank bank for six-months capping withdrawals at ₹1,000 per account and disallowing the bank to make any fresh loans for six months. Amid several depositors protesting in front of the government and the RBI, the withdrawal limit has been increased to Rs. 40,000.
Moreover, the Supreme Court has also stayed the Bombay High Court order directing sale of bankrupt HDIL to ensure repayment of dues and refused to the RBI-sanctioned limits on withdrawal. The Maharashtra government is mulling merging scam-hit bank PMC bank with Maharashtra State Co-operative (MSC) Bank and the RBI is yet to announce any scheme to revive the state-run bank.
After the takeover, PMC Bank had admitted that one large account-Housing Development and Infrastructure Ltd (HDIL) was the sole reason for the present crisis. Following this, the HDIL directors Sarang Wadhawan and Rakesh Kumar Wadhawan were arrested by the Mumbai Police's Economic Offences Wing and the ED in connection with a fraud of over Rs 4,355 crores. PMC Bank officials gave loans to HDIL between the year 2008 and August 2019 despite not paying the previous loans. Six depositors' deaths have occurred due to insufficient cash since then.
PMC Bank which had Rs. 11,500 crore deposited in its 137 branches, has already depleted to Rs 200 crores as Tax officials have asked to pay TDS. Meanwhile, the Central government has sought to improve the situation by introducing the Banking Regulation (Amendment) Bill, 2020 to strengthen cooperative banks by increasing professionalism, enabling access to capital, improving governance.