2,500 crore exposure to HDIL pulled PMC Bank down
A single account is responsible for the downfall of the Punjab & Maharashtra Cooperative (PMC) Bank, which was launched in a tiny room in Sion Koliwada back in 1984 and grew into a 137-branch network with more than half of its branches in the Mumbai Metropolitan Region.
The RBI yesterday put a slew of restrictions on the bank for six months citing several regulatory lapses, primarily massive under-reporting of the non-performing assets (NPAs).
Sources told a local news paper that the biggest reason for RBI’s punitive action was a loan of Rs 2,500 crore to the now bankrupt real estate firm Housing Development and Infrastructure Limited (HDIL).
This newspaper has learnt that the PMC Bank’s auditors did not classify the loan to HDIL as an NPA despite the HDIL defaulting on repayments, and the RBI finally put its foot down and termed the loan as a “complete loss”.