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PMC bank fraud: Mumbai Police’s Economic Offence Wing arrests suspended MD Joy Thomas

Suspended PMC bank MD Joy Thomas. According to the Mumbai Police FIR, the losses in the alleged fraud case have been pegged at Rs 4,355 crore. (Photo: PTI)

Four days after Mumbai Police booked Punjab and Maharashtra Cooperative (PMC) Bank and Housing Development Infrastructure Ltd (HDIL) officials for facilitating loans in violation of RBI norms, the Economic Offence Wing (EOW) of the Mumbai Police Friday arrested PMC's suspended Managing Director Joy Thomas. Thomas, according to PTI, was summoned to the EOW office at the Mumbai Police headquarters and was arrested after a round of questioning. PTI reported that the bank replaced 44 loan accounts of the HDIL group with over 21,000 fake loan accounts, and thus "camouflaged" defaults by the group, the police told a court.

Mumbai: Depositors of Punjab and Maharashtra Cooperative (PMC) bank display placards during a protest over the bank's crisis, outside the Reserve Bank of India building, in Mumbai, Tuesday, Oct 1, 2019. (PTI Photo)

"In the details of loan accounts submitted to the Reserve Bank of India for the year ended March 31, 2018, the PMC replaced the 44 loan accounts of HDIL and its group of companies, whose outstanding balance were significantly higher, with 21,049 fictitious loan accounts," the remand plea was quoted as stating by PTI. On Thursday, the EOW had arrested HDIL directors Rakesh Wadhawan and his son Sarang Wadhawan in connection with the case. According to the Mumbai Police FIR, the losses in the alleged fraud case have been pegged at Rs 4,355 crore.

A depositor of the Punjab and Maharashtra Co-operative Bank (PMC) reacts during a protest over the Reserve Bank of India (RBI) curbs on the bank, outside RBI office in Mumbai. REUTERS/Prashant Waydande

The arrest of PMC's former Managing Director comes hours after the Enforcement Directorate carried out the raids at six different locations across Mumbai. Based on an FIR registered by the EOW, the ED had filed a case under the Prevention of Money Laundering Act (PMLA). The ED is probing allegations that PMC Bank under-reported non-performing assets, or bad loans, after funding a clutch of companies, primarily in the distressed real estate sector. Mumbai Police had first registered an offence on a complaint from the RBI following the collapse of the bank. The RBI had stepped in and placed restrictions on withdrawals after the crisis at the bank came to light last week mainly due to alleged under-reporting of Non-Performing Assets (NPA).