A recent police complaint alleges that the Punjab and Maharashtra Co-operative Bank (PMC) made up 21,000 fake accounts to hide loans, according to a report by Reuters.
The complaint was filed with the Economic Offences Wing (EOW) of the Mumbai Police on Monday (Sept. 30). It alleges that the bank’s management deliberately hid non-performing assets and disbursing loans, the results of which equaled a loss of $615.4 million.
“The actual financial position of the bank was camouflaged, (and) the bank deceptively reflected a rosy picture of its financial parameters,” the complaint said. The fake accounts were never put into the bank’s core system — a move similar to a fraud last year at Punjab National Bank.
Bank Chairman Waryam Singh and Managing Director Joy Thomas, as well as other bank officials, are named in the complaint. They’re accused of criminal breach of trust, forgery and falsification of records.
Bankrupt realty company Housing Development and Infrastructure Ltd, as well as its ex-senior execs Sarang Wadhwan and Rakesh Wadhwan, were named in the complaint. They were beneficiaries of the loans.
The investigation is expected to be completed in the next two months. PMC is the largest bank under Reserve Bank of India (RBI) administration.
The RBI moved to take control of PMC after the lending issues were uncovered. PMC is not allowed to renew or give any loans or make any investments without explicit approval, and depositors in the bank were told they can only take out a maximum of 10,000 rupees, or $140, from their accounts through the next six months.
This news sparked protests by account holders who congregated outside an RBI office in Mumbai to demand that their funds be released.
Managing Director Joy Thomas reportedly was the one who exposed the scam, as he wrote a letter to the RBI and admitted that he hid details of the fraud and oversaw it.