RBI Appointed Administrator To File Complaint Against Former PMC Bank Management
RBI-appointed administrator for PMC Bank is likely to file a formal complaint against suspended bank MD K Joy Thomas.
The Reserve Bank of India-appointed administrator for Punjab and Maharashtra Cooperative Bank is likely to file a formal complaint against K Joy Thomas, the suspended managing director of the bank.
Last week, the RBI placed the bank under restrictions and subsequently dismissed the board and management of the lender. The regulator cited major financial irregularities, failure of internal controls and wrong/under-reporting of loan exposures as reasons behind the move.
Thomas, addressed the media on Friday in his personal capacity, and admitted that the bank has misreported its exposure to entities related to the Housing Development and Infrastructure Group.
“The decision to file the complaint came after Thomas admitted to misreporting loan level data to HDIL Group, JB Bhoria, the administrator told BloombergQuint.
The inspection team from the RBI is still doing its work to collect proof regarding any wrongdoing at the bank. But now that Thomas has openly disclosed that there was hiding of loan information, we feel it is a criminal offence. A complaint will be filed soon.JB Bhoria, RBI-Appointed Administrator For PMC Bank
At a press conference on Friday, Thomas said that the cooperative bank had extended Rs 2,500 crore to HDIL Group and had not declare the outstanding loans as non-performing assets.
"The only wrong thing we did was breach exposure norms. But our exposure is covered by a lot of securities, which will ensure good recoveries,” he said, speaking about the bank’s HDIL exposure. According to Thomas, the bank’s board was also not aware of these loans extended to the group. The reason the bank’s management did not disclose these loans nor classify them as bad loans was primarily to not disclose these loans nor classify them as bad loans was primarily to not “hinder the bank’s growth”, he said.
Misreporting of loan exposures and under-reporting of stressed assets are serious violations of the RBI’s banking regulations and prompt stern action from the regulator.
Rakesh Singh, personal advocate for Thomas, told BloombergQuint that there is no “criminal angle to this.”
K Joy Thomas has already gone and talked to the RBI about the fact that these loans were not disclosed. There was never any intention to cheat anyone. We hope and pray that the RBI does not engage in any criminal prosecution.Rakesh Singh, Personal Advocate For K Joy Thomas
With serious violations detected at the lender, depositors of PMC Bank have been restricted from withdrawing deposits of more than Rs 10,000 from their bank accounts for a six-month period. The RBI has said that it may consider easing the restrictions further, if the financial position of the cooperative lender improve.