If probe revealed that HDIL, after receiving loans from PMC, had illegally transferred the money to ‘tax havens’, sections of Prevention of Money Laundering Act might be invoked
Economic Offence Wing (EOW) of the Mumbai police on Friday hinted that it will investigate the alleged unholy nexus between the crippled Punjab and Maharashtra Cooperative (PMC) Bank and HDIL while extending the unprecedented amount of loan leading to financial irregularities. EOW will also look into the alleged violation of Reserve Bank of India’s unit, sectoral and group exposure norms while granting loans.
EOW will also probe whether HDIL after receiving loans from PMC bank had illegally transferred the money to countries known as ‘tax havens’. If the EOW traces the money trail in that direction, sections of Prevention of Money Laundering Act might be invoked.
An EOW officer, who did not want to be identified, told DNA, “BJP leader Kirit Somaiya and several account holders on Thursday had filed a complaint against the officers of PMC Bank and HDIL for allegedly looting Rs 3,000 crore of the depositors. EOW will compile necessary details and probe key aspects including unholy nexus, violations of exposure and prudential norms, the involvement of PMC Bank board of directors and officers bypassing the credit appraisal norms and corporate governance leading to irregularities.” The investigation will also reveal whether the officers were indulged in money, he added.
TAX HAVENS
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| If probe revealed that HDIL, after receiving loans from PMC, had illegally transferred the money to ‘tax havens’, sections of Prevention of Money Laundering Act might be invoked |
The officer said EOW will also probe the conspiracy if any hatched by the PMC bank management and HDIL officers to rob depositors money.
A retired banker from the bank said media reports indicate financial irregularities, wrong or under-reporting of financial position by PMC Bank and lack of adequate surveillance system. “The forensic audit of PMC’s transactions with HDIL will bring out a lot of facts,” he noted.
Another former banker from the private sector bank said the investigation will also reveal whether the PMC Bank has lent about Rs 3,000 crore to HDIL in violation of corporate entity norms of exposure. "As per RBI norms, the exposure should be 15% of the net worth of the corporate entity. In this case, PMC Bank's net worth should have been in excess of Rs 25,000 crore which is not. So the probe will bring to the surface how the board of directors has given its approval when HDIL was facing trouble since 2018," he opined.
According to PMC Bank annual report, in the financial year 2018-19, the bank saw an increase in stressed assets which affected its financial position. PMC Bank's asset quality declined as gross non-performing assets (NPAs) ratio — bad loans as a percentage of gross advances — rose to 3.76%, versus 1.99% in the previous year. Net NPA too expended to 2.19% during FY19 as compared to 1.05% in FY18. The bank's absolute gross NPA increased more than two-fold to Rs 315.24 crore in 2018-19 from Rs 148 crore in 2017-18.
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