‘PMCB was break­ing RBI rules for 6-7 yrs’ HDIL Ac­counts For 31% Of Bank’s Loan Book

The Times of India (New Delhi edition) - - Times Business - TIMES NEWS NET­WORK

Mum­bai: Sus­pended MD of PMC Bank Joy Thomas has ad­mit­ted that the trou­bled bank has had a long re­la­tion­ship with realty group HDIL and that the lender had been break­ing RBI’s rules for six to seven years. In fact, the bank ap­pointed Waryam Singh, who was on the board of HDIL—the bank’s largest bor­rower—as its chair­man in 2015.

Ad­dress­ing the me­dia on Fri­day, Thomas said the bank’s to­tal ex­po­sure to HDIL was Rs 2,500 crore. This sin­gle group ac­counted for 31% of the bank’s en­tire loan book of Rs 8,300 crore as on March 2019. “We have been lend­ing to HDIL since 1989. The breach in ex­po­sure limit was not re­ported to RBI for six-seven years,” said Joy. He added that for the last three years, al­though the re­pay­ment was ir­reg­u­lar, the bank did not re­port the ad­vances as NPAs as it held se­cu­rity worth twice the value of the loan.

“Our in­ten­tion was to grow fast. We did not dis­close our ex­po­sure be­cause that would have cre­ated a run on the bank,” said Thomas. Ac­cord­ing to Thomas, the bank ad­vanced an ad­di­tional Rs 96 crore to the pro­mot­ers of HDIL last month de­spite the com­pany be­ing ad­mit­ted for pro­ceed­ings un­der the In­sol­vency and Bank­ruptcy Code. “We ex­tended the loan to pro­tect our se­cu­rity and pre­vent it from be­ing part of bank­ruptcy pro­ceed­ings,” Thomas.

Al­though Thomas said that the board was not in­volved in the lend­ing de­ci­sions, he did not touch upon chair­man Waryam Singh’s con­flict of in­ter­est. Singh was chair­man of the bank be­tween 1999 and 2005 and again took charge in 2015.

At the time he took charge the sec­ond time, the bank was over­ex­posed to HDIL. Ac­cord­ing to dis­clo­sures made by HDIL at Bom­bay Stock Ex­change, Singh sold 79.9 lakh shares in HDIL rep­re­sent­ing a 1.9% stake on March 22. Thomas said that the de­ci­sion to lend to HDIL was taken at the bank’s cen­tral of­fice and there was no pres­sure to dis­burse the loan. Ac­cord­ing to the sus­pended CEO, the bank has 1,754 co­op­er­a­tive credit so­ci­eties as cus­tomers and 15,000 co­op­er­a­tive hous­ing so­ci­eties.


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