Reuters learned about the massive fraud through a complaint filed with the Economic Offences Wing (EOW) of Mumbai Police earlier this week, alleges that PMC concealed $616 million in NPLs.
BloombergQuint said PMC's loan book had a 73% exposure to HDIL's failed real estate dealings.
"The actual financial position of the bank was camouflaged, & the bank deceptively reflected a rosy picture of its financial parameters," said the complaint, noting that the fictitious loan accounts were not entered into the bank's core banking system - a factor key in the perpetration of a $2 billion fraud at Punjab National Bank that was uncovered in 2018, said Reuters.
The complaint says PMC's Chairman Waryam Singh and its Managing Director Joy Thomas were at the center point of the fraud. It also names HDIL's former senior executives Sarang Wadhwan and Rakesh Wadhwa, who were the recipients of the real estate loans.
As recession fears intensify in India, the PMC banking crisis has ignited the debate among government officials that the banking sector could be headed for turmoil.
The Reserve Bank of India (RBI) took over PMC last week and has prevented the bank from new loan creation, while nearly 900,000 depositors have been informed that capital controls are being placed on their accounts for six months.
Dozens of videos have been uploaded to social media this week, detailing how depositors are being locked out of their accounts, some fear the worst, as the bank has likely failed.
Victims of #PMCBank crisis speak the truth: Sab Accha Nahi Hai.
One depositor said he lost all of his money in the PMC banking crisis.
These people deserve this, they voted to see India as a Hindu Rashtra, now they are facing it.
NO SYMPATHY. Jai Aryavart .
Thousands of people have marched in the streets this week, demanding PMC return their savings.
Humne Kya galthi ki apko vote deke ???
Honestly no sympathy for these people sorry #PMCBank #PMCBankCrisis
Another heartbreaking moment when a woman discovers her family's savings were completely wiped out in the banking crisis.
Hundreds crowd inside one PMC bank branch, attempting to withdraw their savings, as they learn the bank failed.
CNBC TV18 reported depositors are feeling "anger and pain" as they learn capital controls have limited them to only withdrawing $100.
With a financial crisis developing, the Reserve Bank of India is scrambling to reassure the public that the banking sector isn't imploding.