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Homebuyers wrote to PM about stuck projects, weeks before HDIL fraud surfaced

The bank allegedly violated RBI norms by extending loans to HDIL beyond permissible limits. (Express file photo)

Three weeks before the Punjab and Maharashtra Co-operative (PMC) Bank fraud surfaced, a group of homebuyers of the scam-hit realty developer HDIL had written to Prime Minister Narendra Modi seeking his intervention to resolve their distress. The Whispering Towers Flat Owners Welfare Association representing over 450 home-buyers of the HDIL project in suburban Mulund, Mumbai have in a letter dated September 1, to the Prime Minister said they are seeking his intervention as a last resort. Now, with the realtor s promoters in jail in a cheating case related to the scam at PMC Bank, the worries of the homebuyers have intensified. According to the letter, over 450 families have paid around Rs 350 crore to HDIL, but the project has been stuck for the past nine years. Other HDIL projects like the Majestic Tower in Nahur and Paradise City in Palghar in Maharashtra are also stuck. The project was launched in 2010 and bookings were accepted since then. But, in the past nine years, only 18 floors of the 46 storeyed-tower have been built, while work has not even started on the second phase, said the association. HDIL, which is now facing insolvency proceedings in the bankruptcy court NCLT, had taken Rs 175 crore from Allahabad Bank, J&K Bank and Syndicate Bank for the project, the letter said. Another Rs 525 crore was raised by the company for the project but we believe the money has been siphoned off as the project has been stuck for long, it said. HDIL has done a blatant fraud by not informing Allahabad Bank about the sale of flats to home-buyers and has also cheated the customers by not issuing them NOCs from the bank for taking home loans from various lenders, the letter further said. On October 3, the Economic Offences Wing of the Mumbai Police arrested the promoters of HDIL, Rakesh Wadhawan and his son Sarang Wadhawan, for their involvement in PMC Bank fraud. PMC Bank is under regulatory restrictions after the Reserve Bank of India found out financial irregularities in its functioning, hiding and classification of loans given to HDIL. Based on our audit procedures and as per the information and explanations given by the management, the company has defaulted in repayment of loans and interest to banks and financial institutions, the auditors of HDIL said in the Annual Report. Unpaid overdue interest and principal to banks and financial institutions as of March 2019 is aggregated to Rs 1780.97 crore. The overdue relates to the financial Years 2013-14, 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19, the Annual Report for FY19 said.