He further said that the bank had sought time for a resolution plan, which the ED had agreed to, while also saying that the RBI would conduct a normal inspection which was also due
Punjab & Maharashtra Co-operative (PMC) Bank’s exposure of Rs 2,500 crore to the Housing Development & Infrastructure (HDIL) Group was in excess of the Reserve Bank of India’s (RBI) prescribed limits for single-group exposure, Joy Thomas, suspended chief executive of the bank, said on Friday. The central bank is likely to raise the withdrawal limit for deposit-holders to Rs 1 lakh from Rs 10,000 presently, he added.
The loans to HDIL had not been reported during the last six or seven years as the management had earlier feared that disclosing the exposure would lead to “a run on the bank”, according to Thomas. “We ourselves went to the RBI on September 19 to meet the executive director (ED) Rabi Mishra and appraised him of our situation and asked for some time to regularise the loans,” Thomas said at a press conference, adding, “The intention was very clear that we wanted to grow fast and the exposure getting reported could have created a run on the bank.”
He further said that the bank had sought time for a resolution plan, which the ED had agreed to, while also saying that the RBI would conduct a normal inspection which was also due. “ED had told us that normally during inspection time you get two months’ time till it carries on and we also thought we had time. The next day, the inspecting officers came and collected all the information. On September 23 evening, we got the communication for restraining the depositors,” Thomas said.
Thomas held that the RBI could have handled the situation better as the liquidity profile of the bank was stable. “Whatever has happened is not fraud; it is technical in nature and we could have rectified it without affecting the depositors,” he said. On the question of how the RBI missed the exposure during its audits and whether PMC Bank had deliberately concealed it, Thomas was cryptic. “I am not going to tell you how it (HDIL’s NPAs) got hidden, it is that they (RBI) have not seen,” he said.
The decision to lend Rs 96.5 crore to HDIL in August 2019 to enable it to stay out of insolvency proceedings initiated by Bank of India (BoI) was taken by PMC Bank in the interest of protecting the security against its exposure to the realtor, according to Thomas. “My point is that admission into NCLT would have led to a very long battle which would have affected us further and that is why we went to RBI. The loans are secured by land and buildings of 2.5 times of the total loans,” Thomas said, while admitting that the bank’s board was not privy to the decision to extend this loan.