The Ministry of Corporate Affairs (MCA) has ordered an inspection into Housing Development and Infrastructure (HDIL) to see if it was a business failure or a case of mismanagement, a senior government official said.
The MCA has already issued a lookout circular against the founders of HDIL, the official confirmed. "If a bank has sunk because of exposure to one company, it is worth looking into," he said.
The Mumbai police on Monday filed a case against Punjab and Maharashtra Co-operative (PMC) Bank and HDIL officials for allegedly violating Reserve Bank of India (RBI) norms by extending loans to the real estate development company beyond permissible limits.
The ministry will study the books of account, related-party transactions and filings of the company to decide if the case needs to be referred to the Serious Fraud Investigation Office. "At this stage, it is just an inspection. We will take appropriate action if there is a criminal misconduct," the official added.
PMC Bank's suspended managing director (MD) and chief executive officer (CEO) Joy Thomas wrote a five-page confession letter on September 21 to the Reserve Bank of India (RBI), reviewed by Business Standard, where he described the relation of HDIL's promoter family with PMC Bank in detail, and how both sides helped each