The agency conducted searches at six places in Mumbai and neighbouring areas linked to the former chairman of the bank, promoters of HDIL.
Mumbai: Joy Thomas, the suspended MD of crisis-hit Punjab and Maharashtra (PMC) Bank, has been arrested in an alleged Rs. 6,500 crore fraud case, sources in the Economic Offence Wing in Mumbai said reporeted NDTV.
The arrest comes barely a day after the former board of PMC and senior executives of its borrower Housing Development and Infrastructure Ltd (HDIL) were charged with money-laundering by the ED.
The agency conducted searches at six places in Mumbai and neighbouring areas linked to the former chairman of the bank and promoters of HDIL.
Rakesh Wadhawan and Sarang Wadhawan, senior executives at HDIL, are in police lockup till October 9.
PMC bank had given 75 pc of its entire loanb book to the now bankrupt HDIL. The promoters of HDIL allegedly created 21,000 fake accounts to hide the loans from PMC. HDIL promoters continued to hide the bad loans they had taken and the PMC bank itself continued to hand out loans to the construction company despite the company being taken for insolvency.
Investigators have said that the PMC Bank officials misled the RBI for over a decade from 2008 to August 2019. The fictitious loan accounts created for HDIL were not entered into the bank's core banking system - a factor key in the Rs 14,000-crore fraud at Punjab National Bank that was uncovered in 2018.
The PMC case has sparked renewed concerns about the health of India's troubled banking sector, which has been rocked by a multi-billion dollar fraud at a state-run lender, the collapse of a major infrastructure lender, bad loan issues at state-run banks and a liquidity squeeze that has hit shadow lenders.
On Thursday, the Reserve Bank of India on Thursday raised withdrawal limit for account holders of the stressed PMC Bank to Rs. 25,000 from earlier withdrawal limit of Rs. 10,000.
The Reserve Bank of India (RBI) last week moved to take charge of PMC, one of India's top five co-operative lenders with more than nine lakh depositors, and suspended Joy Thomas and the bank's board after uncovering lending irregularities.