Daijiworld Media Network - Mumbai
Mumbai, Oct 12: Punjab and Maharashtra Co-operative (PMC) Bank has lent Rs 6,500 crore to Housing Development and Infrastructure (HDIL), which accounts to 73 per cent of the bank’s total loan book.
HDIL executive chairman Rakesh Kumar Wadhawan and his son Sarang Wadhawan aka Sunny Dewan, vice-chairman and managing director of HDIL were arrested on October 3, following an FIR from The Economic Offences Wing of the Mumbai police.
HDIL which is facing bankruptcy proceedings had borrowed huge loan amounts from PMC Bank. The outstanding loan amount against Rakesh Wadhawan is Rs 1,902.6 crore and against Sarang is 128.6 crore.
The PMC bank had wrongfully advanced loans amounts. It is alleged that 21,049 fictions bank accounts were created to prevent HDIL loans showing up as large exposure in its core banking system. This is a serious violation of the RBI norms. PMC Bank managing director Joy Thomas confessed that the PMC management was hiding crucial information on HDIL's debt, a non-performing asset for the bank, from RBI.
Rakesh Wadhawan founded HDIL in 1996, and by 2009, at age 57, he entered into the billionaire’s club. Their empire developed cracks around 2013, when Mumbai International Airport (MIAL) Limited terminated HDIL’s contract for the redevelopment of slums around the airport. The company’s stock also crashed in 2013 after Sarang Wadhwan sold 1 per cent of his company for Rs 57 crore.
“A change in government in 2014, a flagging economy and the ensuing liquidity crunch… given all of these things, one could see that a collapse was imminent,” says a source to a newspaper.
The company since the last two years has been selling land parcels in various parts of Mumbai to generate cash flow and reduce debts. However, delay in approvals by municipal authorities and the overall slowdown in the market shrank cash generation. The company had a debt of around Rs 2,000 crore in FY19.
Rakesh and Sunny are famous in social and celebrity circles and are known for their lavish lifestyle. Rakesh Wadhawan once owned about 100 horses, collectively valued at over Rs 20 crore. Meanwhile, in 2008, according to a report, Sunny’s fleet of cars included a Land Rover, a Bentley, two Rolls-Royces – the Phantom and the D8 coupe – a Lamborghini, a Porsche and a Ferrari F430 Modena. Sunny also picked up a Ferretti, an 88-foot yacht, for $8.5 million (over Rs 24 crore).
Rakesh Wadhawan and his son are famed to travel with their bodyguards who are from Israel, South Africa and Russia.
The PMC case and arrest has made matters worse for HDIL and the Wadhawans. “Once they were untouchable and the arrest proves they are finished,” says a source.