HDIL not servicing loans for 3 yrs, says suspended PMC MD
MUMBAI: Housing Development & Infrastructure Ltd (HDIL) has not been servicing its loans worth ₹2,500 crore from Punjab and Maharashtra Co-operative Bank (PMC) for the past two-three years, Joy Thomas, the suspended managing director of the crisis-hit bank said on Friday.
Speaking to reporters, Thomas said PMC has had a banking relationship with the group since 1989-1990, but the loan amount grew over the last six-seven years, and it was not reported to the central bank. Thomas denied that there was external pressure on him or the bank to grant these loans. “I am not going to tell you how it (HDIL’s exposure) got hidden; it is that they have not seen,” said Thomas.
When asked about the reason for underreporting of these loans, Thomas said PMC Bank wanted to grow fast and reporting the exposure could have led to a run on the bank. “We thought that if there was a run on the bank then the depositors, employees will face a lot of problem,” he added.
According to Thomas, the exposure was not reported during the last six-seven years and the management came clean to the Reserve Bank of India (RBI) on September 19 during a meeting with RBI executive director Rabi Mishra. The management, he said, apprised him of the situation and sought additional time to regularize the account.
“We sought time for a resolution plan and the executive director had agreed that they will conduct a normal inspection, which was due. Mishra had told us that normally during inspection, banks get two months’ time till it carries on and we also thought we had time,” he added.
The next day, he said, the RBI’s inspecting officers came and collected all the information and on September 23 evening, the central bank issued the restrictions.
“The regulator took a stricter decision, which has caused a lot of harm to the depositors, which we could have managed in a better way,” he said.
Thomas said the bank also sanctioned a loan of ₹96.5 lakh to the group so that they could repay Bank of India (BoI) and avoid bankruptcy proceedings. He added that this loan was, however, not sanctioned by the board of directors of the bank.
BoI was among the lenders that initiated bankruptcy proceedings against HDIL before the Mumbai bench of the National Company Law Tribunal (NCLT) last year.
However, the two parties arrived at a settlement in September 2018, under which the builder agreed to repay the bank in instalments and clear all dues by August 2019. Subsequently, the bank withdrew the bankruptcy proceedings. However, HDIL could not meet the deadline and, on August 20, the Mumbai bench of the NCLT admitted BoI’s fresh insolvency petition against HDIL for failing to repay ₹522.3 crore.
“The exposure which we have reported was to HDIL, which although, has a delay in repayment and the classification is wrong, is backed by almost 200% of the outstanding (security) and interest with our bank,” he said.