EoW files FIR against officials of HDIL, PMC Bank over alleged fraud

In the six-page letter, Joy Thomas details the birth and growth of the relationship between PMC Bank and HDIL and refers to at least three occasions in which the company infused funds when the bank was struggling, including a Rs 100 crore payment in 2004.

Debt-ridden Housing Development & Infrastructure Ltd (HDIL) plunged to a record as regulators examined the scale of the real estate developers borrowings from a lender that was sanctioned by the Reserve Bank of India (RBI).

". As the loans outstanding were huge and if these were classified as NPA (non-performing assets) it would have affected the profitability of the bank. this would have created reputation risk for the bank".

In a communique issued the previous day, RBI Chief General Manager Yogesh Dayal said as per the apex bank's directions, depositors can not withdraw more than Rs 1,000 from their savings/current/other deposit accounts, leading to huge chaos outside the PMC branches in Mumbai and other parts of India.

Under the restrictions, which are to be applicable for six months, a depositor is able to withdraw only Rs 10,000 per account.

Among that plethora of lenders, only the 54 biggest are monitored by the central bank and investors are now trying to figure out whether they pose a new threat to a banking system hobbled by a 9.3% bad-loan ratio, the highest in the world. Many had also lined up outside bank branches after the announcement. The RBI restricts single borrower exposures to one-fifth of the total.

According to a report by brokerage firm Jefferies, YES Bank had an exposure of Rs 3,700 crore to DHFL - which has also defaulted on its loans.

"In the initial inspection, the RBI has found that there was massive erosion of deposits from certain accounts".

While RBI spokesman did not comment, the PMC administrator could not be reached. Even the larger ones aren't as intensively supervised as the commercial banks, however, because their respective state governments play a role in regulation.

Thomas, the prime accused, had earlier said in a confession to the RBI that the bank had given loans to HDIL and its related entity in thousands crores without informing all the former board members.