Mumbai, Oct 3 (IANS): The Chairman and Managing Director of real estate development company HDIL were arrested on Thursday in connection with the Rs 6,500 crore loan default of Punjab & Maharashtra Co-operative (PMC) Bank.

Accordingly, Rakesh Kumar Wadhawan, the Chairman, and Sarang Wadhawan, Managing Director of HDIL were arrested by the Economic Offences Wing (EOW) of the Mumbai Police.

Besides, the assets of HDIL worth Rs 3,500 crore have also been frozen.

Earlier, the government had issued a lookout circular against the two directing the immigration authorities to ensure that they do not leave India through an airport or seaport.

HDIL is also embroiled in the crisis at Punjab and Maharashtra Cooperative (PMC) Bank, which has extended a substantial amount of loans to the company.

PMC’s exposure to HDIL group is nearly 73 per cent of its total loan book size of Rs 8,880 crore as of September 19, 2019.

In an alleged confession letter to the RBI, the bank's suspended managing director Joy Thomas had accepted giving loans to realty developer HDIL and its related entity to the tune of Rs 6,500 crore without informing all the board members.

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 per cent 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.