Home >Companies >News >No fraud has taken place at PMC Bank, issue is technical in nature: Joy Thomas
A man walks out from a PMC (Punjab and Maharashtra Co-operative) Bank branch in Mumbai (Photo: Reuters)
A man walks out from a PMC (Punjab and Maharashtra Co-operative) Bank branch in Mumbai (Photo: Reuters)

No fraud has taken place at PMC Bank, issue is technical in nature: Joy Thomas

  • RBI is likely to increase withdrawal limit to 1 lakh, says the suspended MD
  • Loans granted by PMC Bank were not reported during the last 6-7 years due to classification of our portfolio, says Thomas

New Delhi: Punjab and Maharashtra Cooperative (PMC) Bank's former MD K Joy Thomas said at a press conference on Friday that Reserve Bank of India (RBI) is likely to increase withdrawal limit to 1 lakh.

The press conference comes in the backdrop of RBI imposing certain restrictions on the bank.

"RBI could have handled the situation better. Whatever has happened is not fraud, it is technical in nature and we could have rectified it without affecting the depositors," said Thomas.

"Loans granted by PMC Bank were not reported during the last 6-7 years due to classification of our portfolio," said Thomas.

"Gave fresh loans of 96.5 crore HDIL to save our interests by trying to avoid bankruptcy proceedings for the company," clarified Thomas.

HDIL’s FY18 balance sheet shows it secured a loan from PMC Bank carrying 13% interest rate, secured by pledging fixed deposit receipts. HDIL owns 190,000 shares of the bank and 93,957 shares in Dreams The Mall Co. Ltd, which owns the building housing PMC Bank’s head office, Mint reported.

"We disclosed the divergence to RBI on 19 September and we were surprised by the Section 35A order on 23 September evening as we were expecting to get some time to rectify it," Thomas added.

The exposure getting reported would have created a run on the PMC Bank, said Thomas.

PMC Bank's account holders are in distress as the RBI has put a cap of 10,000 on withdrawals over a period of six months. Earlier, it had put a cap of 1,000 in six months, but it was increased after protests by the account holders and criticism of the move.

RBI said the directions were necessitated on account of major financial irregularities, failure of internal control and systems of the bank and wrong or under-reporting of its exposures under various off-site surveillance reports.

The RBI has also sacked the bank's board of directors under sub-sections 1 and 2 of Section 36 AAA read with Section 56 of the Banking Regulation Act 1949. An administrator has been appointed to take charge.

PMC Bank is a multi-state scheduled urban cooperative bank with operations in Maharashtra, New Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh. With a network of 137 branches, it ranks among the top 10 cooperative banks in the country.

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