RBI wanted PMC chief to be sacked

The RBI Bank had reportedly recommended removal of the PMC Bank chairman Waryam Singh last year after it had found out his involvement in sanctioning loans to realty developer HDIL and related-entities without proper due diligence and much above the regulatory limits, a source has said.

Singh, however, continued to remain the chairman until recently, the person familiar with the development said.

The RBI recommendation was sent to the Registrar of Cooperative Societies of Maharashtra which has administrative control over the co-op banks in the state.

Neither the registrar nor Singh could be be contacted immediately for comments.

According to the source, of the bank’s more than Rs 6,500 crore exposure to the bankrupt HDIL Group, the latest tranche of Rs 96.5 crore was disbursed on August 31.

Singh was on the board of HDIL from 2006 to 2015 as a non-executive director and held 1.91 per cent stake in the company, which could possibly be a conflict of interest.

Singh stepped down from the HDIL board in March 2015 before selling his entire stake in the company.

Cooperative banks keep failing as there is a dual control on urban cooperative banks (UCBs) by the RBI and the state where they are registered. Moreover, almost all these entities are controlled by politicians. PMC is the 24th urban cooperative bank to be put under RBI administrator this year alone.

In the annual inspection conducted in 2017-18, the RBI had reportedly asked the bank to classify the entire HDIL accounts as NPAs. At that time, the bank had said the loans to the group was only Rs 258 crore and the exposure was fully provided for with collaterals.

The RBI regulates and supervises the banking functions of UCBs and carry out on-site inspections and off-site surveillance on them. It also issues directions to UCBs.