The Economic Offences Wing of Mumbai Police has filed a first information report against officials of Mumbai-based Punjab and Maharashtra Cooperative Bank and realty developer Housing Development and Infrastructure Limited, or HDIL, for loan default reportedly up to Rs 4,300 crore, PTI reported on Monday. A special investigation team has been formed to conduct inquiries into the case, the police added.

The investigators have filed a case for cheating, criminal breach of trust, forgery, and criminal conspiracy under the Indian Penal Code against the bank’s Chairperson Waryam Singh and its Managing Director Joy Thomas. The police are also in the process of issuing a lookout notice against them. The FIR also names HDIL promoters Rakesh Kumar Wadhawan and Sarang Wadhawan, The Economic Times reported.

The FIR against the officials was filed at the behest of an administrator appointed by the Reserve Bank of India last week to oversee the cooperative bank’s operations while it is under investigation. According to the complaint, the accused officials deliberately misled the Reserve Bank of India for more than a decade, from 2008 to August 2019, by not disclosing big accounts that had become non-performing assets, Reuters reported. They allegedly produced forged audit reports.

Last week, the RBI imposed restrictions and said depositors would not be allowed to withdraw more than Rs 1,000 from the bank for six months. The central bank also said PMC Bank would not be allowed to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds. It later increased the withdrawal limit for bank customers to Rs 10,000.

Petition in Bombay High Court

Meanwhile, a petition filed in the Bombay High Court on Monday challenged the restriction imposed by the central bank. The Public Interest Litigation plea was filed by Consumer Action Network, a non-governmental organisation, and eight people with accounts in the cooperative bank.

“The RBI decision is irrational and arbitrary and is violative of the fundamental rights of common public,” said the petitioners. “There was no prior intimation given by the RBI.” Their plea is likely to be heard by a division bench.

Following the RBI’s decision, account holders had protested outside bank’s main branch in Mumbai’s Bhandup area and various other branches. Many had also lined up outside bank branches after the announcement.

The bank, founded in 1984, operates in Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. It has 137 branches in six states, and is among the top 10 cooperative banks in the country.

Also read: Who is to blame for the mess at PMC bank (and will depositors get their money back)?

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