The Ministry of Corporate Affairs (MCA) has issued a request to the Ministry of Home Affairs (MHA) to process a lookout circular (LOC) against Housing Development and Infrastructure Limited (HDIL) MD Sarang Wadhawan and whole-time director Rakesh Wadhawan, government sources told CNBC-TV18. A lookout circular prevents an accused from leaving the country.
HDIL is embroiled in the crisis at Punjab and Maharashtra Cooperative (PMC) Bank, which has extended a substantial amount of loan to the company.
Last week, the central bank put PMC Bank under restrictions for six months, meaning the lender cannot give fresh loans and accept fresh deposits during the period. Withdrawals have been capped at Rs 10,000 per account. These restrictions are put when there are three consecutive years of adverse supervisory report. The move resulted in chaos outside the bank's branches in the financial capital.
Joy Thomas, PMC Bank's suspended MD, has reportedly admitted to the Reserve Bank of India (RBI) that the bank's actual exposure to the bankrupt HDIL is over Rs 6,500 crore — four times the regulatory cap or a whopping 73 percent of its entire assets of Rs 8,880 crore.
"HDIL has been made aware of certain regulatory action against PMC Bank and its Management. It is also learnt that certain action is being initiated against HDIL and its promoters. We are unaware of any action against HDIL and its promoters," the real estate company said in an exchange filing.
However, the company clarified that "adequate security cover in favour of the banks including PMC Bank have been created over the assets of the company for these facilities in due compliance with all banking regulations as per guidelines described RBI".
The company added that it has been facing temporary cash flow issues due to the external environment in the real estate sector.
Currently, HDIL is developing various projects at Kurla, Nahur, Mulund and Palghar and has a residential portfolio of 86.22 lakh sq ft under construction.It has a land reserve of around 193 million sq ft as on March 31, 2019, with 90 percent of its land reserves in Mumbai Metropolitan Region, as per the 2018-19 annual report.
Incorporated in 1996, Mumbai-based HDIL mainly focused on real estate development in the Mumbai Metropolitan Region, which included clearing slum land and rehabilitating slum dwellers.
The main source of revenue of HDIL, for long, has been selling of development rights to other property developers, after developing the slum land.The company reported a revenue of Rs 601.20 crore in FY19 and a net profit of Rs 96.19 crore.
(With inputs from PTI)
