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First arrest in PMC bank loan default case, two HDIL directors held by Mumbai Police

On September 30, EOW of Mumbai Police had registered an FIR against senior officials of HDIL and PMC Bank in connection with a fraud of over Rs 4,355 crores.

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The Mumbai Police on Thursday made its first arrest in connection with the loan fraud in Punjab and Maharashtra Cooperative (PMC) Bank case which has led to restrictions on withdrawals for bank customers. 

Sarang Wadhawan and Rakesh Wadhwan, both directors of Housing Development Infrastructure Limited (HDIL), are accused of loan default in connection with the PMC Bank case.

They were arrested by the Economic Offence Wing of Mumbai Police after interrogation. They were arrested after they failed to cooperate in the investigation.

Ten of 44 accounts which led to PMC Bank falling in debt were linked to HDIL and Wadhnwans. Their personal accounts were among these ten accounts.

On September 30, EOW of Mumbai Police had registered an FIR against senior officials of HDIL and PMC Bank in connection with a fraud of over Rs 4,355 crores.

"EOW has formed a special investigation team for the probe. The FIR has been registered on the complaint given by one Jasbir Singh Matta," police said in a press note.

According to the police, PMC bank officials gave loans to HDIL between 2008 and 2019 despite no repayment of the previous loans.

The FIR was registered under Sections 409 (criminal breach of trust), 420 (cheating), 465 (forgery), 466 (forgery of record of court or public register), 471 (using a forged document as genuine) and 120B (criminal conspiracy).

Suspended MD Joy Thomas had on September 28 admitted that the bank did not report the financial exposure to the Reserve Bank of India (RBI) for over six years.

The loan default case came to light after the RBI imposed restrictions on withdrawals from the bank on September 23. In directions issued to the bank, the RBI said that depositors will be allowed to withdraw a sum not exceeding Rs 1,000 of the total balance in every bank account.

The bank will also not be able to "grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties" without prior approval in writing from the RBI, the central bank said. 

After outrage from angry customers, RBI increased the withdrawal limit from Rs 1,000 to 10,000 on September 26 but other restrictions remained in place. 

(With ANI inputs)

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