New details are emerging in case of the Punjab and Maharashtra Co-operative Bank that was put under regulatory restrictions by RBI earlier this week. As per a report in Mumbai Mirror, many irregularities have been reported in the bank’s management.
The report in Mumbai Mirror states that a builder named Sarang Wadhwan, of the debt-ridden real estate firm HDIL was granted a personal loan of Rs 96.5 crores by the PMC Bank, just a month before the RBI restrictions.
The personal loan to Wadhawan was granted despite the fact that his firm HDIL had defaulted on a massive 2500 crore loan from the PMC Bank. HDIL had reportedly stopped repaying the loan and the bank had also neglected to put the 2500 crore loan under NPA (non-performing assets).
On September 24, the PMC Bank was put under severe regulatory restrictions by the order of the RBI. Though the banking license was not cancelled, the bank will also not be allowed to grant or renew any loans, make any investment, sell any properties without prior approval of RBI. These restrictions will be in place for a period of six months.
The PMC Bank failing to report its NPAs to the RBI was cited as one of the major reasons for the restrictions. Mumbai Mirror had earlier reported that the loan default by HDIL was the principal reason behind the restrictions on the bank. The report stated that the PMC Bank had total lendings at around 8300 crores and exposure to HDIL alone was 31%.
The report also states that HDIL had taken the loan from PMC Bank to settle the loan from Bank of India which had initiated bankruptcy proceedings against the firm. BOI has moved to the National Companies Law Tribunal (NCLT) against HDIL.
Yesterday, the RBI has eased savings withdrawal restrictions on account holders and had stated that account holders can withdraw Rs 10,000 now. Earlier, withdrawals were restricted to Rs 1000.
