Punjab & Maharashtra Co-operative Bank

Punjab & Maharashtra Co-operative Bank Limited (PMC), is a multi-state co-operative

bank that began operations in 1983.It has 137 branches spread over half a dozen states
of India and nearly 100 branches are in Maharashtra. It is regulated by the Reserve Bank of
India and registered under the Cooperative Societies Act.

It also has branches in Karnataka, Goa, Delhi, Madhya Pradesh and Gujarat. It is one of the

profitable co-operative banks in India and had earned a total revenue of ₹1,297
crore (US$182 million) and profits of ₹99.69 crore (US$14 million) in the financial year
2019.[1]

Punjab and Maharashtra Cooperative Bank (PMC Bank) has been facing regulatory actions
and investigation over alleged irregularities in certain loan accounts. Loans given to
financially stressed real estate player Housing Development & Infrastructure (HDIL) are at
the centre of the investigation.

The crisis at PMC Bank first came to light on September 24, 2019, the day the Reserve Bank
of India (RBI) placed curbs on the activities of the Mumbai-based bank for six months.

The Enforcement Directorate has filed a money laundering case in the PMC Bank scam.

On 23 September 2019, the RBI imposed operational restrictions on PMC Bank for six

months. Due to this, the bank account holders are not allowed to withdraw more than ₹1,000
from their accounts during this period of restrictions. On 26 September the restrictions have
been eased and a total of Rs 10000 could be withdrawn by customers. Joy Thomas, the MD
of the bank, was suspended. He admitted the exposure of the bank to the troubled realty
company HDIL and also stated that the company had been violating the RBI rules for 5-6
years now. Of the overall loan book of 8300 crores, PMC bank loans to HDIL stood at
Rs.6226 crore, about 73% of total loans of the bank.

To solve this, HC appoints the three-member committee to oversee the sale of assets of
Housing Development Infrastructure (HDIL) to pay the depositors of Punjab and
Maharashtra Co-operative Bank (PMC Bank). HDIL, its promoters Rakesh and Sarang
Wadhawan, and a few former officials are accused of committing a fraud on PMC Bank.
Public interest litigation filed in the high court, seeking the setting up of a committee to speed
up the auction of HDIL's assets to pay depositors, has claimed that the realty firm owed ?
4,635 crore to the bank. The court said if the proceeds from the sale were insufficient to pay
the dues, the committee would identify and dispose of the properties of other companies
owned or promoted by the Wadhawans which were mortgaged with the PMC Bank, but with
paripassu charge of other financial institutions.

The court also said that the assets of HDIL and its promoters Rakesh Wadhawan and Sarang
Wadhawan must be sold at the earliest in the interest of the PMC Bank and its depositors.

The Bombay High Court on Thursday said the HDIL and its promoters Rakesh Wadhawan
and Sarang Wadhawan will have to repay their loan to crisis-hit Punjab and Maharashtra
Cooperative (PMC) Bank as it was in the interest of the lender and its depositors.

The court also said that the assets of HDIL and Wadhawans must be sold at the earliest in the
interest of the PMC bank and its depositors.

A division bench of Justices Ranjit More and S P Tavade was hearing a PIL filed by an
advocate, Sarosh Damania, seeking directions for expeditious disposal of HDIL Group assets
attached by the EOW and the Enforcement Directorate (ED), and repaying depositors of the
PMC bank at the earliest

"You (HDIL) have taken a loan and you have to repay it. The assets must be sold at the
earliest. This will be in the interest of the bank and its depositors," the court said.

Earlier, following the court's previous directions, Housing Development and Infrastructure
Ltd (HDIL) Managing Director Sarang Wadhawan on Wednesday filed an affidavit, listing
thegroup's assets (both encumbered and unencumbered).

Wadhawan also told the court that he has no objection if the company's encumbered
properties are sold for recovery of money payable to the bank.

HDIL counsel Vikram Chaudhri on Thursday told the court that the encumbered properties
shall be sold first and if there was any shortfall, then the unencumbered assets could be
touched.

"The liability to the bank as per the FIR lodged by the police's Economic Offences Wing
(EOW) is Rs 4,355 crore. The encumbered assets are valued at Rs 11,000 crore. It would be
more than sufficient," Chaudhri said.

Advocate Hiten Venegaonkar, appearing for the ED which is probing money laundering
charges against Wadhawans, told the court that in the present case, the agency has not
attached the properties keeping in mind the interest of the depositors.

He said the encumbered properties of HDIL, however, need to be valued as in some

properties there are third party rights.

Chaudhri further argued that Rakesh Wadhawan and Sarang Wadhawan should be granted
bail so that they could assist the process of identifying and selling of properties.

The bench, however, refused the contention.

After hearing the arguments, the court reserved its judgment on Damania's PIL.

The fraud at PMC Bank came to light in September this year after the RBI found out that the
lender had allegedly created fictitious accounts to hide over Rs 4,355 crore of loans extended
to the almost-bankrupt HDIL.

According to the RBI, PMC Bank had masked problematic 44 loan accounts, including HDIL
loan accounts, by tampering with its core banking system, and the accounts were accessible
only to limited staff members.

The city police's EOW and the ED registered offences against senior bank officials and HDIL
promoters Rakesh Wadhawan and Sarang Wadhawan.

Damania in his petition said normal court proceedings will take years to refund the dues of
depositors. Therefore, directions were required for the speedy disposal of attached assets and
properties.

The Wadhawans are currently in judicial custody.