Thursday, September 29, 2022

Former MD says Rs 2,500-cr loan took down PMC Bank

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New Delhi: Punjab and Maharashtra Co-operative Bank’s (PMC) total exposure to real estate company Housing Development and Infrastructure Limited (HDIL) is at Rs 2,500 crore, former PMC Bank MD Joy Thomas said at a press conference on Friday. Thomas was suspended from the position earlier this week.

“HDIL was not able to make repayments for the past two to three years,” Thomas said.

‘Loans given to HDIL didn’t have board approval’

“Loans given out to HDIL did not have board approval,” the former MD said and added that they were approved from the central office. “We approached the RBI on September 19 to flag loans that were not reported in the past seven years.”

Thomas also assured that the crisis-stricken bank has ample land and buildings as collateral against these loans that amount to 2.5 times of the exposure. He added that he has heard that the Reserve Bank of India (RBI) is planning to raise the withdrawal limit further from Rs 10,000 to Rs 1 lakh.

Rs 2,500-cr loan to HDIL brought down PMC Bank

Report said that a loan of Rs 2,500 crores extended to HDIL, which is now bankrupt, was the prime reason behind the downfall of PMC Bank. It added that despite the defaults by HDIL on repayment of debt, PMC Bank’s auditors had failed to classify the loan as a non-performing asset (NPA).
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The backdrop

Earlier this week, the bank imposed a slew of restrictions on PMC Bank for a period of six months, allowing withdrawals of only Rs 1,000 from the bank’s depositors. On September 16, the RBI further raised the withdrawal limit to Rs 10,000. The curbs left the customers in the lurch and panic-stricken about the fate of their deposits and savings.

The restrictions were imposed after the Central bank found certain irregularities in the bank, including under-reporting of NPAs and had put restriction on fresh lending.

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