PMC Bank Scam: Surjit Singh Arora was a director at PMC Bank and was also on the bank's loan committee

A former director of the Punjab and Maharashtra Bank or PMC Bank, mired in controversy after a multi-crore scam, was arrested today by Mumbai police's Economic Offences Wing or EOW. Surjit Singh Arora was earlier called in for questioning by the Mumbai police's Economic Offences Wing. Surjit Singh Arora was a director at the PMC Bank and was also on the bank's loan committee, according to an official, reported news agency PTI.

Surjit Singh Arora was questioned by the Special Investigation Team of the Economic Offences Wing. An EOW official said his role in the scam "has come to light".

"His role in the scam has come to light. He was involved in the loan sanctioning process," an official was quoted as saying by PTI.

The crisis at the cooperative bank was set off after real estate firm HDIL defaulted on loans from PMC Bank worth Rs 4,355 crore.

The PMC Bank has been placed under "directions" by the Reserve Bank of India (RBI) since last month. This means that depositors' withdrawals have been capped. The central bank on Monday raised withdrawal limit for account holders of PMC Bank to Rs 40,000 from the earlier withdrawal limit of Rs 25,000.

Worried depositors of the bank, which has deposits of over Rs 11,000 crore, have been protesting across Mumbai. Last week, they protested at the site of Finance Minister Nirmala Sitharaman's press conference. Later, they met Ms Sitharaman, who subsequently urged the RBI Governor to look into the concerns of the customers.

Four people, including promoters of HDIL to which PMC Bank made the sour loans, and the bank's former chairman and ex-managing director have so far been arrested in connection with the latest banking fraud case to spook the country's depositors and investors.

The PMC case has sparked renewed concerns about the health of India's troubled banking sector, which has been rocked by a multi-billion dollar fraud at a state-run lender, the collapse of a major infrastructure lender, bad loans at state-run banks and a liquidity squeeze that has hit shadow lenders.

(With Inputs From PTI)