"On 19 September, we voluntarily reported our NPA on account of HDIL to RBI," Thomas said while addressing the media on Friday.
The Reserve Bank of India's (RBI) decision to suspend Punjab and Maharashtra Co-operative (PMC) Bank's banking activities for six months was taken in haste and has led to the bank's paralysis, a top executive said on Friday. Ruling out fraud and terming the whole issue as "technical in nature", PMC Bank's suspended managing director K Joy Thomas blamed RBI for creating a panic situation among the bank's depositors. "We could have rectified it without affecting depositors," he said.
While admitting that the bank had not disclosed its non-performing assets (NPAs) for six to seven years, arising from the loans extended to HDIL, Thomas said this was due to classification of the portfolio. He explained that the issuing of a new personal loan of Rs 96.5 crore to Housing Development and Infrastructure Ltd (HDIL) earlier this month, even after it had defaulted on a Rs 2,500-crore loan, was to "protect our interests" by trying to save the beleaguered real estate company.
"On 19 September, we voluntarily reported our NPA on account of HDIL to RBI," Thomas said while addressing the media on Friday.
"We also sought time to rectify it. So we were surprised by the RBI order of September 23 stopping us from lending or accepting deposits for a period of six months."
The RBI's punitive action was "unnecessary", he added, as "our exposure to HDIL is Rs 2,500 crore" but it is "backed by securities and assets that are 2.5 times more than the loan amount". "I assure depositors that their money is safe," Thomas said. "I take full responsibility for the lapses. The bank's board members were not aware of the loan to HDIL."
The loans to HDIL were given over a period of eight years and the difficulty in repayment started two years ago, he clarified. He held the view that RBI could have handled the situation better so that depositors wouldn't have been impacted. "I am not blaming the regulator," he added. "But we have lots of entrepreneurs who run small businesses and they are impacted."
RBI's "over-reaction" also came into play when they increased the depositor's withdrawal cap to Rs 10,000 after fixing it at Rs 1,000 a day earlier, and are now likely to further up this to Rs 1 lakh. "If cash-flow was an issue, which RBI thought the bank had, then how did it take the call overnight to increase the withdrawal limit? When all other banking modes, such as Internet banking were shut, we had to physically transport cash to our 137 branch locations. RBI has been unfair to us," he whined.
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