Former PMC bank MD calls RBI’s decision ‘harsh’, says bank didn’t commit any fraud

The former MD admitted that they had not classified the loans fearing it will puncture the growth of the bank.

Calling the Reserve Bank of India’s decision to impose a withdrawing limit on Punjab and Maharashtra Cooperative Bank and its depositors as ‘harsh’, former Managing Director of the Bank Joy Thomas Friday said when they informed the central bank about the Rs 2,500 crore loan given to HDIL group they expected the former to support and provide a resolution plan.

Addressing a press conference in Mumbai, Thomas, who was suspended as managing director of the Punjab and Maharashtra cooperative bank recently, admitted that they had not classified the loans fearing it will puncture the growth of the bank.

Explained | Why RBI has put restrictions on PMC bank, what happens now

“I take responsibility for this. The board of directors were not aware of the loans,” said Thomas. He added, “We did not classify the lending not because we were afraid that the borrower (HDIL) will default but because we wanted time to resolve this. They are not non-paying assets. Security is 2.5 times the amount of loan given,” he said.

Thomas said the bank has not committed any fraud, it may have made a technical error in decision making. “Interests of the bank and our depositors is most important to us,” he said.

On September 23, RBI had put the cooperative bank under directions to limit cash withdrawal to Rs 1000 per account for the next six months. On Friday, further relaxations were given and an account holder could withdraw Rs 10,000. The bank, spread over five states, had met RBI officials on September 19.

The RBI’s earlier direction had left several customers in jeopardy. Abdul Rehman, a resident of Govandi, who works as a lighting technician on a production set recounted his experience when he went to the bank.

“I don’t know how I will run my house with Rs 1,000. Despite having money in my account I have to go around borrowing money,” said Rehman. He had to stand from 10 am till 7 pm outside the bank’s Chembur branch on Tuesday to break two of his FDs one of Rs 1.5 lakhs and other of Rs 50,000. On Wednesday he finally withdrew Rs 1,000.

“Now I will go to the production house and ask for cash. Until now my salary was getting deposited in the bank account.”

He added that the bank officials had been giving vague replies and there is no clarity about the future of his account and fixed deposits. The bank’s board remains suspended and an administrator has been appointed.

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