PMC Bank scam: SC stays HC order allowing shifting of Wadhwans from jail

The high court had set up a three-member committee for valuating and sale of encumbered assets of HDIL to expeditiously recover dues payable by the firm to PMC bank.

The Supreme Court on Thursday partially stayed the Bombay High Court order allowing shifting of HDIL promoters Rakesh Wadhawan and Sarang Wadhawan, accused in the multi-crore Punjab & Maharashtra Cooperative (PMC) Bank scam case, from Mumbai's Arthur Road Jail to their residence.

A bench comprising Chief Justice S A Bobe and justices B R Gavai and Surya Kant took note of the submissions of Solicitor General Tushar Mehta that the high court order to the extent of allowing their release from prison needed to be stayed.

The law officer said the other aspect of the high court order such as sale of assets of the accused promoters under the supervision of high court appointed committee should be allowed to remain operative and the sole objection was with regard to their release from Arthur road jail.

The top court agreed with the submissions.

Earlier during the day the apex court had agreed to consider the plea of enforcement agencies against the high court order to release them from jail and keeping them in their residence under the constant watch of prison guards.

Mehta mentioned before the bench that the PMC bank scam involved Rs 7000 crore and the high court had on Wednesday passed a very "unusual order" while hearing a public interest litigation (PIL).

Mehta told the bench that the father-son are presently lodged under Arthur Road jail in judicial custody and if they are shifted to their residence as per the high court's order, it would be like bail to them.

The high court had on Wednesday set up a three-member committee for valuating and sale of encumbered assets of Housing Development and Infrastructure Limited (HDIL) to expeditiously recover dues payable by the firm to PMC bank.

PMC Bank case: Praful Patel used Wadhawans' aircraft eight times, says ED

So far, the ED has attached and identified assets worth Rs 3,830 crore in the PMC money laundering case.

Trouble is mounting for former Union minister Praful Patel, with the Enforcement Directorate (ED) finding his name on the passenger manifest of an aircraft that belongs to the Wadhawans, HDIL promoters.

The documents examined by the ED, which is probing the Rs 4,355-crore Punjab & Maharashtra Co-operative (PMC) Bank loan case, show that Patel used the aircraft multiple times in 2012 when he was civil aviation minister.

The probe agency, in this case, has seized two aircraft — Bombardier Challenger-300 VT and Falcon 2000 VT, owned by Privilege Airways. Rakesh Wadhawan and son Sarang Wadhawan of Housing Development & Infrastructure (HDIL) are directors of Privilege Airways

According to ED sources, Patel had used the aircraft at least eight times in 2012 between February and May. The documents showed that the Nationalist Congress Party (NCP) leader was accompanied by some other party leaders during these trips. The destinations were mostly Mumbai to Nagpur, Delhi, and Gondia.

So far, the ED has attached and identified assets worth Rs 3,830 crore in the PMC money laundering case. These assets belong to its directors, promoters, PMC Bank officials, and others. The assets, both immovable and movable, will be attached under provisions of the Prevention of Money Laundering Act (PMLA) after valuation, it said.

During the search in the case, ED has reportedly found incriminating documents revealing instances of siphoning of the funds and their misuse.

Certain transactions are showing a clear diversion, such as a Rs 98-crore loan from PMC Bank was diverted to M Estate Developers, a proprietorship concern of a close business associate of Rakesh Wadhawan. The Mumbai Police EOW has already arrested the Wadhawans in connection with the case, besides former MD of PMC Bank Joy Thomas.

Business Standard

FM Nirmala Sitharaman assures change in cooperative bank laws if required

Tells PMC Bank depositors that government and Reserve Bank working on solving their problems.

The government is ready to bring in changes in the laws governing multi-state cooperatives, which also run banks, Finance Minister Nirmala Sitharaman said on Thursday. She also said a three-member committee comprising two secretaries of the finance ministry and a deputy governor of the Reserve Bank of India (RBI) would be set up to look into the issues of multi-state co-operative banks.

While speaking at a press conference here, Sitharaman said, “If amendments are going to help us curb malpractices and regulate and empower them better, the RBI will do it.” She added that the committee that would look into the matter would take necessary legislative steps to prevent such things from happening in future and empower the regulator. “In the forthcoming winter session of Parliament, if necessary, we will be bringing important legislation changes, which may be necessitated."

Before addressing the media, the finance minister also spoke to irate depositors of Punjab and Maharashtra Co-operative (PMC) Bank and assured them that the government and the RBI were working to solve their problems. She told them that she would speak to RBI Governor Shaktikanta Das on this matter.

Sitharaman also clarified that even though multi-state cooperative banks are not registered under the RBI, they are still regulated by the central bank and therefore it can be empowered to regulate these banks better.

The Rs 4,355-crore PMC Bank scam came to light after a whistleblower informed the RBI that the board of the cooperative bank was manipulating books of the bank to give loans to the Mumbai-based realty firm Housing Development & Infrastructure (HDIL).

The economic offences wing of Mumbai police has lodged a case against PMC Bank officials, HDIL group entities and its promoters. HDIL promoters Rakesh and Sarang Wadhawan, and former PMC Bank chairman S Waryam Singh and former managing director Joy Thomas have also been arrested. The Enforcement Directorate has also filed a money laundering case against the promoter of HDIL and the few board members of the PMC Bank.

Business Standard

Shadow bank woes may continue to haunt stock market after disrupting rally

The S&P BSE Sensex Index posted its third day of losses on Tuesday, ending a surge since the Sept 20 announcement of the tax cuts.

Business Standard : India’s shadow banking crisis has sucked in more financial firms this week, eroding a stock market rally that’s been driven by a surprise $20 billion tax cut package.

The S&P BSE Sensex Index posted its third day of losses on Tuesday, ending a surge since the Sept. 20 announcement of the tax cuts. Financial stocks, which account for 45 per cent of the benchmark index, contributed the most to the declines since late last week, according to data compiled by Bloomberg.

Debt concerns at lenders including Indiabulls Housing Finance Ltd. and a co-operative bank, and worries a cleanup in corporate debt could be prolonged, have spooked the financial markets. The sight of depositors lining up to pull their money from Punjab & Maharashtra Co-operative Bank Ltd., after the central bank put limits on lending, has also been unsettling.

The Reserve Bank of India on Friday tweeted the “banking system is safe and stable and there is no need to panic.” The nation’s stock markets will reopen Thursday after a one-day holiday.

Banking Troubles

Punjab & Maharashtra Co-operative Bank concealed large exposures from RBI since 2008, a former managing director said

Central bank put restrictions on Lakshmi Vilas Bank Ltd., which Indiabulls Housing plans to acquire

Yes Bank Ltd.’s shares plunged almost 34 per cent in two days on concerns a cleanup in corporate debt could drag on

Here is what the analysts are saying:

Stay Selective

Negative news flow around lenders has “overshadowed the recent tax cut tailwind, bringing focus back on sector issues: liquidity issues and contagion risks,” Jefferies Financial Group Inc. analysts including Bhaskar Basu wrote in a note on Tuesday.

Basu said he likes non-bank lenders with a strong liability base, low asset quality risks and good earnings visibility. He prefers stocks including Bajaj Finance Ltd. and Mahindra & Mahindra Financial Services Ltd.