PMC exposure to HDIL 73% of all its assets

Or four times the regulatory cap — of over Rs 6,500 crore

The now-suspended managing director of the crisis-hit Punjab and Maharashtra Cooperative Bank (PMC), Joy Thomas, has reportedly admitted to the RBI that the bank's actual exposure to the bankrupt HDIL is over Rs 6,500 crore -- four times the regulatory cap or a whopping 73 per cent of its entire assets of Rs 8,880 crore.

As per regulations, single entity exposure limit for banks is 15 per cent of their capital fund. For group companies, the exposure limit is 20 per cent. Thus, PMC's exposure to HDIL is almost four-times of what RBI mandates.

The admission came after a board member leaked the actual balance sheet details to the Reserve Bank, a source in know of the details said.

The slum redevelopment focused Housing Development and Infrastructure or HDIL is in the bankruptcy court after being hit by a severe cash crunch following the failure of some of its key projects in the city.

While HDIL did not reply to a detailed e-mail sent by PTI on the issue, the bank, its chairman Waryam Singh,

and Joy Thomas could not be reached for comments immediately.

The source told PTI that non-disclosure of the HDIL status and the quantum of the exposure to the group was leaked by one of the PMC board members himself to the Reserve Bank, forcing Joy Thomas to confess the misreporting. According to the source, Thomas wrote a fourand-a-half page detailed letter to the regulator giving details of how he, along with six key people who include a few board members, including chairman Waryam Singh and one or two senior bank officials, were sanctioning loans to the HDIL Group. The source further said Thomas has also confessed that most of the board members were in the dark about these loans. Waryam Singh was on the board of HDIL for nine years between 2006 and 2015 and had held 1.91 per cent stake in the company during this period. He ceased to be a non-executive director of the company in March 2015. Before he exited the HDIL board, Singh had sold his entire stake in the company.

"The whistleblower board member approached the regulator and provided information about financial irregularities and the real estate company's loans not being classified as non-performing loans for the last two-three years, despite defaults on repayments," the source told PTI.

"This forced Thomas to go the RBI. In a four-and-a-half page letter, he confessed the wrongdoings and ever-greening of some other key accounts," he added. The loans were sanctioned to the realty developer since 2008, the source said. In the confession letter, Thomas also put the actual NPA number at 60-70 per cent, as against a reported net NPA of 2.19 per cent as of March 31, 2019, the source said.

Though the RBI is still inspecting the bank's balance sheet, if the NPA numbers turn out to be as per Thomas' confession, it will be the highest in the banking industry so far. On September 19, Thomas met RBI Executive Director Rabi Mishra and sought time to resolve the issue, citing HDIL was in advanced stages of selling some of its real estate assets. The money from the asset sale could have helped HDIL repay at least the interest part, Thomas had informed the RBI. -- PTI