PMC Bank, Yes Bank scams linked to Wadhawan family

The fiscal year 2019-20 has not been great for India's banking sector. Two big banks - Punjab & Maharashtra Co-operative Bank and Yes Bank tumbled in a matter of six months.

Both banks are now under supervision of the Reserve Bank of India.

Incidentally, both banks and their top bosses have some links to the Wadhawan family.

The Wadhawan family owned the huge stretches of property in the Mumbai metropolitan region, was into real estate development and construction, stayed in bungalows and luxury apartments, owned best of luxury cars and rubbed shoulders with celebrities and who's who.

Besides, to top it off, they had all the needed political connections.

Now the family is facing a crisis.

Follow live updates on the Yes Bank crisis here

Late Diwan Kuldeep Singh Wadhawan, who hailed from a wealthy Sindhi-Punjabi family, migrated to Mumbai (then Bombay) after the Partition in 1947.

His two sons are Rajesh Wadhawan and Rakesh Wadhawan.

Two two main Wadhawan Group companies are Housing Development and Infrastructure Ltd (HDIL) and Dewan Housing Finance Ltd (DHFL).

As of now, late Rajesh's sons - Dheeraj and Kapil control DHFL while Rakesh and his son Sarang control HDIL. "Besides, as a family, they own several companies and own properties in India and abroad," informed sources said, adding that the collective value runs into several crores.

"They were rich Sindhi-Punjabis. Once they settled in Mumbai, they purchased land and sold to builders for development. Over the years, they became giants in the game and became big with all the methods that is needed in this field," said veteran crime journalist and writer Baljeet Parmar, one of those who knows the finer details of the transformation of India's commercial capital.

"A few years ago they were among the biggest names in Mumbai's real estate scenario. They had a huge worth," said Varun Singh, an expert and analyst on real estate sector.

On 21 September, 2019, when the RBI took control of the PMC Bank, the role of HDIL (Rakesh Wadhawan and his son Sarang) came to light. The father-son duo are among those who were arrested by the Economic Offences Wing of the Mumbai Police.

The Rs 6,300 crore fraud involving the PMC Bank has rattled depositors, a bulk of whom were from the Punjabi community.

The 32,000-page chargesheet had also named former Chairman of PMC Bank Waryam Singh, former MD Joy Thomas, ex-Director Surjit Singh Arora. The Enforcement Directorate has booked the Wadhawans for laundering more than Rs 2,500 crore of the Rs 6,700 crore loans that HDIL took from PMC Bank between 2007-13.

The case of ED and EOW revolves around evergreening of loans. For PMC Bank, one of the biggest multi-state co-operative bank, the Wadhawans were the biggest clients. Several fictitious accounts have come to light during the probe.

On the other hand, for Yes Bank, once the fourth-largest private bank, the risky loan list is long - the Anil Ambani Group, Essel Group, IL&FS, Vodafone and DHFL.

Wadhawan brothers - Kapil and Dheeraj control DHFL.

The founder of Yes Bank Rana Kapoor is now in a mess for his relations with the troubled DHFL.

According to investigations, Yes Bank has provided a Rs 3,750 crore loan to DHFL and another Rs 600 crore to RKW Developers, controlled by DHFL. They defaulted on payment but got kickbacks of Rs 600 crore in Doit Urban Ventures, an entity controlled by Kapoor family. Kapoor is now under ED custody.

In another case, ED had arrested Kapil Wadhawan, a former DHFL CMD and one of the promoters of RKW Developers, in a money laundering case that it is investigating against late Muhammed Iqbal Memon alias Iqbal Mirchi, one of the frontmen of underworld don Dawood Ibrahim. Kapil is currently out on bail.