A forensic audit has uncovered damning irregularities in a loan sanctioned by Punjab & Maharashtra Co-operative (PMC) Bank to a real estate firm—raising fresh concerns over flawed credit practices and alleged fraud at the institutional level, reports by India Today and Times Now claimed.
According to the audit findings, PMC Bank extended a sanction of ₹87.5 crore to Prithvi Realtors and Hotels Pvt. Ltd. — on paper. However, no actual funds were ever disbursed. Despite this, interest continued to accumulate, ballooning the amount owed to over ₹150 crore.
The audit, carried out by Deepak Singhania & Associates, examined extensive documentation, including sanction letters, mortgage deeds, and account statements, submitted during a pending arbitration matter between the bank and the borrower.
Records show that the loan began as a ₹10 crore mortgage overdraft, which was later enhanced to ₹87.5 crore. The facility was secured against a land parcel measuring 53,680 sq. m. in Vasai, Thane. Yet, the borrower’s account showed no inflow of funds following the enhancement—not even a single rupee after October 31, 2012.
The report makes a scathing observation:
“There is no financial trail validating the transfer of funds. No utilization entries. No repayment activity. Only recurring interest.”
The audit’s conclusions were echoed in an arbitration proceeding, where the tribunal flagged serious ethical and legal lapses. It cited impersonation, forged documentation, and intentional misrepresentation, calling it a “premeditated and grave financial fraud.”
Citing key rulings by the Supreme Court, the arbitration panel refused to adjudicate, stating that fraud of such magnitude falls outside the purview of arbitration law.
This explosive case has now landed before the National Company Law Tribunal (NCLT), where the spotlight will shift to the legal enforceability of a loan that technically never reached the borrower. A hearing is expected this week, with both the bank and the company under scrutiny for procedural and financial accountability.
Legal experts argue that the case could become a precedent-setting example of how paperwork without actual transactions can be weaponized to generate false liabilities.
At its core, this scandal exposes a dangerous loophole—where loans can exist without liquidity, interest can pile up without principal, and the borrower can be billed for a debt never received.