(Bloomberg) -- Debt-ridden Housing Development & Infrastructure Ltd. plunged to a record as regulators examined the scale of the real estate developer’s borrowings from a lender that was sanctioned by India’s central bank.
HDIL’s shares, which have plummeted 85% this year, dropped 4.8% at 10:53 a.m. in Mumbai. The Reserve Bank of India last week curbed deposit withdrawals from Punjab & Maharashtra Co-operative Bank Ltd. for six months, citing major financial irregularities, failure of internal controls, and wrong and under-reporting of exposures.
About a third of the bank’s loans were given to HDIL, K Joy Thomas, former managing director of Punjab & Maharashtra Cooperative, told BloombergQuint. Banks are mandated to limit loans to a single borrower at less than one-fifth of their total exposure. The central bank has since removed the management of the lender.
Read more on RBI’s reasons to sanction the bank
Unlisted Punjab & Maharashtra Cooperative’s exposure to HDIL may have been much higher at 73% of its assets, Press Trust of India reported on Sunday, without citing anyone.
HDIL’s Chief Financial Officer Darshan Majmudar didn’t respond to an email seeking comment. Managing Director Sarang Wadhawan didn’t answer a call and a text message to his mobile phone. Lenders, led by Bank of India, dragged the real estate developer into bankruptcy proceedings in August.
The loans from the cooperative bank helped HDIL delay insolvency proceedings, Thomas said. Punjab & Maharashtra Cooperative has 137 branches in six Indian states.
The RBI didn’t name any company in its statement on Punjab & Maharashtra Cooperative’s exposures.
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