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Former PMC Bank chairman, HDIL directors sent to police custody till October 14

Directors of defunct Housing Development and Infrastructure Limited (HDIL) have been sent to police custody till October 14 for their involvement in the Punjab and Maharashtra Co-operative (PMC) Bank fraud.

HDIL promoters and directors, Sarang Wadhawan and Rakesh Wadhawan, who were earlier arrested by the Mumbai Police’s Economic Offences Wing (EOW), will now be in police custody till October 14 for further questioning in connection with the Rs 4,300 crore loan default case.

Both were sent to police custody after they were produced at Mumbai’s Esplanade Court on Wednesday. Waryam Singh, the former chairman of PMC Bank, has also been sent to police custody till October 14.

The EOW is expected to interrogate the arrested individuals to extract more information about the murky lending activities, which continued for years despite HDIL’s inability to repay loans.

Mumbai Police’s EOW is also likely to investigate auditors of defunct HDIL in connection with the fraud. The findings of the auditors in financial reports will be scrutinised as part of the investigations, reported financial daily livemint.

However, the priority of the EOW will be on questioning auditors of HDIL who will now be in custody till October 14.

It is worth noting that Mumbai-based chartered accountant firm Rajeswari and Associates was the legal auditor of HDIL.

Meanwhile, auditors of PMC Bank will also be scrutinised as they failed to classify loans awarded to HDIL as non-performing assets (NPA) despite the company’s inability to repay dues.

The PMC Bank fraud came to light just a day after RBI imposed strict restrictions on it. Former managing director of the bank Joy Thomas wrote a letter to RBI, detailing the chain of events which led to the bank’s Rs 6,500 crore exposure to HDIL.

This amount is four times greater than the regulatory cap or at least 73 per cent of PMC Bank’s entire asset pool of Rs 8,880 crore.

As soon as the fraud came to light, panicked customers protested after they were just allowed to withdraw Rs 1,000 per account in the bank for a period of six months.

While RBI later increased the withdrawal limit for PMC Bank customers to Rs 25,000 for the same period, unhappy customers still continue their protest against limited withdrawals during the period.

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