To allay fears of depositors and customers of Punjab & Maharashtra Cooperative (PMC) Bank, its suspended managing director Joy Thomas has stated that the lender holds enough liquidity to meet all liabilities and that every penny of the public is secure.
The statement comes two days after the Reserve Bank of India (RBI) superseded its management and placed it under an administrator for the next six months.
The regulator has also capped cash withdrawal at Rs 1,000 per customer during this period and banned the bank from any fresh lending during this period.
In a chat with news agency PTI, Thomas stated that one large account – HDIL – was the sole reason for the present crisis that led to the regulatory action.
Although the official did not disclose the exposure to HDIL, the bank’s the largest and one of the oldest customers, he said all other accounts were safe and fully-secured.
“All other loans are more than fully-secured and there is no need for any customer to panic. We have enough liquidity and back-up securities for all what we have lent. As a cooperative bank, we never do unsecured lending and our loan coverage ratio has always been 100-110 percent,” Thomas said.
The bank has cash liquidity of around Rs 4,000 crore in the form of statutory liquidity ratio (SLR) and cash reserve ratio (CRR), while its liabilities are around Rs 11,600 crore, he added.
RBI’s action was in response to under-reporting of NPAs from the HDIL account, which Thomas attributed to the slum redevelopment company’s cash crunch and resultant delay in payments.
According to sources, the bank reported NPAs of 1.05 percent in FY18, instead of the actual 2.19 percent.
“The divergence was only on HDIL. There was a difference between what we were reporting and what the actual numbers were. There was a delay on repayment for the last two-three years and we have been under-reporting that,” Thomas admitted.
He further claimed that normalcy would return sooner than later as the loan to HDIL was fully-secured and the bank was already in talks with the lender to sell its assets and recover the dues.
“We have been working with HDIL for the past many months and we know they are in advanced stages of monetising their assets. That’s why we are saying that we will be out of the problem soon,” he said.
The reason for supporting the now-bankrupt HDIL reportedly stemmed out of loyalty towards the firm, which was among the bank’s first big clients and contributed to about 40-50 percent of their total turnover.
Meanwhile, to ensure its customers don’t suffer ahead of the upcoming festive season, the bank has requested RBI to increase the withdrawal limit to at least Rs 15,000 as it has enough liquidity to meet that demand.
Thomas also claimed that the bank would come out of the regulatory restrictions in the next 2-3 months, much ahead of the RBI’s six months period.Back to latest news