The disclosures made by Joy Thomas, former Managing Director at PMC Bank, show how various dubious transactions in the bank were kept hidden since 2008. The accounts were managed in a way that neither the statutory auditors nor the periodical scrutiny by the Reserve Bank of India were able to catch the on goings at the bank. Thomas joined the bank as General Manager in March 1987 and was re-designated as Managing Director in 1999.
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PMC Bank commenced operations in February 1984 as a unit bank (with single branch operation) with a capital of Rs 10 lakh. However, within a couple of years, the board was reconstituted in 1986 due to apprehension of closure due to some unlawful deeds by some of the borrowers/member. This was the time when late Rajesh Kumar Wadhawan, the then director of Land Development Corporation and many other companies run by the Deewan family, along with his brother Rakesh Kumar Wadhawan (present director of HDIL), came to the rescue of the bank. The net worth of the bank became negative and it was facing troubles. This family-infused capital helped the bank and also brought its net worth to positive from negative, Thomas wrote in his confession letter to the Reserve Bank of India.
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From 1986 to 1987 the Deewan family kept huge amount of money to the tune of 13 lakh to keep the bank insolvent. The amount of money that was infused into the PMC Bank accounts were in the form of overdraws in current account of various firms of the family. These accounts were regularized on a regular basis. The operations in these accounts were good and satisfactory. Some of the large accounts were not reported to RBI from 2008 because of fear of reputational risk. The size of the bank in 2011 was around 57 branches, with deposits of Rs 2,824 crore and advances of Rs 2,000 crore. The exposure to HDIL group then was Rs 1,026 crore.
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