Ministry of Corporate Affairs begins inspection of HDIL's books of accounts

The Ministry of Corporate Affairs has started an inspection of the books of accounts of realty firm HDIL, which has been unable to meet its debt obligations for quite sometime, according to a senior official.

HDIL is at the centre of the crisis that hit Punjab and Maharashtra Cooperative (PMC) Bank as it had borrowed a substantial amount from the bank.

Also read: PMC Bank saw massive cash withdrawals before RBI clampdown

A senior corporate ministry official said that an inspection of HDIL is being conducted by the ministry's field office.

"At this juncture, it is very clear that there is a huge exposure and that they (HDIL) are not able to repay their debts for quite sometime. There are serious issues on the face of it. They have not been able to generate revenues to meet their debt obligations. Those matters will have to be looked into. We have to see whether there is a business failure or some other issues," the official said on October 1.

Also read: Explained | The PMC Bank crisis and why customers are panicking

The official said that a preliminary examination would be done by the ministry's field office, and once they give their basic report, then a view has to be taken whether there is need for a deeper probe.

"Our inspection is quite thorough. We go through the books of accounts and get a fair idea about how its financial management was carried out. If you find some basic issues with internal financial controls or internal financial management... you will know whether there was anything malafide or not," the official said.

Also read: PMC Bank cancels AGM, loans given to HDIL under RBI scanner

On October 1, an official said a look out circular has been issued against two directors of HDIL after preliminary findings allegedly revealed financial irregularities at the company.

A look out circular is issued against a person directing the immigration authorities to ensure that he or she does not leave India through an airport or seaport.

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.