The RBI details in an affidavit that the PMC bank fraudulently submitted facts to the central bank for a sample check, but that “the accounts selected for inspection did not have unknown HDIL accounts.”

While the HDIL accounts shown by PMC Bank were overseen by the RBI inspection team, most of them were declared non-performing assets.

It also states that PMC Bank had also approved the mortgage limit for a wholly owned subsidiary of HDIL, when the bank’s chairman S.W. Variyam Singh was also a director of the company. This is a clear conflict of interest and violation of the RBI master circulars of July 2010 and July 2012 in effect.

S.W. Variyam Singh also chaired a meeting of the PMC bank board, where he approved the mortgage overdraft, again in violation of RBI norms.

The affidavit states that RBI’s inspection team has established links between Wariam Singh and HDIL promoters / directors (now arrested), which may help them get loan facility, and later with other lenders in arrears. Helped to pay a lump sum settlement.

Based on the available records, the scale of the breach and the associated debt, which was available, was very low due to ‘camouflage’ backed by PMC Bank, and what was noted was ‘flagged’, although it was not found Gaya much affects the financial health of the bank.

The inspection was completed on November 2, 2019 and the report is being ready, the affidavit said.

As per the preliminary findings, due to various financial irregularities, the PMC Bank’s networth had turned negative, with a significant erosion in deposits.

Detailing the “modus operandi of hiding the information related to HDIL exposure” employed by the PMC Bank, the RBI affidavit said they tampered with Management Information Systems and NPC Identification Process.

In this, the bank had given special access codes to the HDIL accounts with restricted visibility to less than 25 out of PMC Bank’s 1,800 staffers.

While running the script for system identification of the NPAs, it deliberately excluded the HDIL accounts which were thus omitted from the system generated reports of NPA accounts, and ditto with the Overdrawn Accounts list.

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