The Economic Offenses Wing (EOW) today arrested HDIL promoters Sarang Wadhawan and Rakesh Kumar Wadhawan, allegedly after the duo refused to cooperate with the enforcement agency when they were called in for questioning.
The Punjab and Maharashtra Cooperative bank fiasco has taken its first casualty, with the promoters of HDIL – the bank’s largest borrowers, getting arrested today. The Economic Offenses Wing (EOW) today arrested HDIL promoters Sarang Wadhawan and Rakesh Kumar Wadhawan, allegedly after the duo refused to cooperate with the enforcement agency when they were called in for questioning, according to television news reports. The EOW has also attached the property of HDIL worth Rs 3,500 crores. In a surprise development, it was found that the PMC bank had lent bulk of its deposits to one entity, ie, HDIL, defying the usual banking norms of risk management. PMC’s exposure to HDIL is nearly 73 per cent of its total loan book size of Rs. 8,880 crore as of September 19, PTI reported quoting an unnamed source.
The PMC bank did not mention the loan default by HDIL in its annual report and continued to give loans despite the company being taken for insolvency and thus the RBI figured out discrepancies in PMC bank’s lending to HDIL. RBI has restricted cash withdrawal from PMC bank to Rs 10,000, causing anguish and hardships to the PMC bank’s depositors.
Meanwhile, the Institute of Chartered Accountants of India (ICAI), the body that regulates chartered accountants, on Wednesday said it has initiated an investigation into the role of auditors in the Punjab & Maharashtra Cooperative (PMC) Bank crisis, and will take disciplinary action against its members if found to be involved in the controversy.
The directions given by the central bank also restricted the bank to grant or renew any loans and advances for another six months, without prior approval in writing from the central bank. The PMC bank is also restricted to make any investment or to incur any liability including borrowal of funds and acceptance of fresh deposits.