October 17, 2019 / 1:03 PM / a month ago

Indian court jails former MD of PMC Bank as fraud probe deepens

MUMBAI (Reuters) - An Indian court on Thursday sent the former managing director of Punjab and Maharashtra Co-operative (PMC) Bank, Joy Thomas, to jail as a probe into an alleged 43.55 billion rupees ($610 million) fraud intensifies.

FILE PHOTO: A man walks out from a PMC (Punjab and Maharashtra Co-operative) Bank branch in Mumbai, India, September 26, 2019. REUTERS/Francis Mascarenhas/File Photo

Thomas stands accused in a police complaint of criminal breach of trust, forgery and falsification of records in relation to PMC’s dealings with the now bankrupt realty company Housing Development and Infrastructure Ltd (HDIL.NS) (HDIL).

He had been detained for questioning earlier this month and kept in police custody.

On Thursday, the Chief Metropolitan Magistrate’s court in Mumbai ordered that Thomas be jailed while the probe into the fraud continues.

PMC allegedly made more than 21,000 fictitious accounts to hide loans it made to HDIL. Last month, the Reserve Bank of India (RBI) took control of the functioning of PMC and initiated a forensic audit. It has also capped withdrawals by depositors, sparking protests.

PMC has not responded to the allegations, the latest scandal to taint India’s troubled banking sector. The administrator appointed by the RBI to oversee PMC was not immediately available for comment on Thursday.

Thomas’s lawyer told the court that his client was acting under instruction of the bank’s board of directors.

Police late on Wednesday also arrested Surjit Singh Arora, a former director of PMC who was a member of its loan committee.

“He abused his official position to facilitate fraud and he needs to be interrogated thoroughly,” police said of Arora in a court filing seen by Reuters.

HDIL’s former senior executives Sarang Wadhawan and Rakesh Wadhawan and PMC’s former chairman Waryam Singh are also in judicial custody and are being investigated.

Waryam Singh’s lawyer denied any wrongdoing by his client and said he wasn’t aware of the allegations. HDIL and Arora’s lawyers were not immediately available for comment.

India’s financial crime fighting agency this week said it had identified and seized assets worth more than 38.3 billion rupees, including two private jets, a yacht and several luxury cars which it says belong to HDIL’s directors and promoters, PMC bank officials and other related entities.

Reporting by Abhirup Roy; Writing by Nupur Anand; Editing by Euan Rocha and Mark Potter

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