Joy Thomas, the former managing director of troubled lender Punjab and Maharashtra Cooperative Bank said the Reserve Bank of India acted in haste in imposing curbs by restricting deposit withdrawals.
“It was a harsh decision on us. Without giving us any time, RBI acted in this manner,” Mr. Thomas said, addressing a press conference.
Earlier this week, RBI imposed restrictions on the city-based lender which created panic among depositors as withdrawals were capped at ₹1,000, which later increased to ₹10,000. The board of the bank was superseded and a former chief general manager of RBI was appointed as administrator.
He said the PMC Bank board members met RBI’s executive director Rabi Mishra on September 19, and informed that the loans to real estate developer HDIL were not disclosed as non-performing for 6-7 years and asked for time from the banking regulator to regularise the account.
“On 20th, inspection officers collected the data from the bank and without any prior notice to the bank, on 23rd restrained the actions of the bank,” he said.
“We knew that if the exposure [were to] be reported, it will create a run on the bank and all the depositors and even the bank staff would have to suffer; so we decided to get some helping guidelines, but RBI acted in the manner which we were afraid of. Bank had enough liquidity, which should have been noted by the RBI.”
On Thursday, while increasing the deposit withdrawal limits to ₹10,000 from ₹1,000, RBI said the curbs were imposed due to ‘major financial irregularities’.
Talking about HDIL, the former MD admitted that the bank extended a loan of ₹2,500 crore in a period of six years. “The company was banking with us since 1989 and they were repaying us the money properly.
“The problem started [over the ] last 2-3 years since they weren’t able to pay.”
Mr. Thomas assured that the money of depositors was safe as they have 2.5 times more worth of security than the exposure to HDIL.
“We have security in the form of buildings and land which are 2.5 times more than the exposure handed.”
Mr. Thomas said, “Even after HDIL went bankrupt, we handed them a loan of ₹93 crore, although the sanction of loan wasn’t done by the board of directors.”
“The loans that were handed to HDIL were left unnoticed in the audit by the RBI since last six to seven years.” Mr. Thomas emphasised that no fraud had taken place. Rather, it was a technical fault. “I’ve been told that the withdrawal limit can be increased to ₹1 lakh,” he added.
