Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
News18 English
News18 » Business
3-min read

PMC Bank Assures Safety of Depositors' Money, Asks Customers to Not Panic as RBI Restricts Withdrawal Limit

The regulator has capped cash withdrawal at Rs 1,000 per customer during this period and also banned the bank from any fresh lending during this period.

PTI

Updated:September 25, 2019, 11:54 PM IST
facebookTwitterskypewhatsapp
PMC Bank Assures Safety of Depositors' Money, Asks Customers to Not Panic as RBI Restricts Withdrawal Limit
Punjab and Maharashtra Bank Ltd, Mumbai

Mumbai: Allaying fears of the depositors and customers, Punjab & Maharashtra Cooperative Bank (PMC), which is now under the management of the Reserve Bank of India (RBI), said it has enough liquidity to meet all liabilities and every penny of the public is secure.

Asserting that all its loans are fully secured, the management admitted that one large account — HDIL — is the sole reason for the present crisis leading to the regulatory action on Tuesday when RBI superseded its management and placed it under an administrator for the next six months.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 also banned the bank from any fresh lending during this period.

Although the bank's now-suspended managing director Joy Thomas did not disclose the exposure to HDIL, which he described as the largest and one of the oldest customers, he said all other accounts are safe and fully-secured.

"All other loans are more than fully secured and there is no need for any customer to panic," Thomas said on Wednesday. "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%."

Thomas said the bank has a cash liquidity of around Rs 4,000 crore in the form of SLR (statutory liquidity ratio) and CRR or cash reserve ratio, while its liabilities are around Rs 11,600 crore.

One of the reasons for the RBI action is the highly under-reported NPAs, which according to sources are in high double-digits, while as per its FY19 balance sheet, it stood at a low 2.19 percent, which though was more than double of 1.05 percent in FY18.

Thomas admitted that the problem rose because of under-reporting of NPAs from the HDIL account. The slum redevelopment company, which has landed in cash crunch, has already gone to the bankruptcy now, has been delaying payments for the past few years.

"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, however, declined to quantify its exposure to HDIL, saying the loan is fully-secured. Explaining that the problem is the delayed repayments by HDIL, he is sure of returning to normalcy sooner than later as the loan is fully-secured and the bank is in talks with HDIL for sell of 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 monetizing their assets. That's why we are saying that we will be out of the problem soon," he said.

Describing HDIL as an old customer and the largest and has been supporting the bank for years, Thomas said, "When we were a single unit bank, they supported us, they also supported us when we were facing problems. When nobody was depositing even a penny with us, they had put in Rs 13 lakh way back in 1988. Nearly 40%-50% of our turnover used to come from them only. We have earned a lot of profit from them...otherwise how can a young bank like ours would have grown and come among the top five."

Thomas said HDIL has been facing problems for the last three-four years after they had lost some of the projects, including the their key slum rehabilitation projects near the Mumbai airport and other bankers stopped lending to it. However, he exuded confidence that the bank will be out of the regulatory restrictions much ahead of the RBI's six months period, say in two-three months.

He said the focus is to safeguard the interest of small depositors as it is the festive season and they would want money. "We have already approached the RBI for increasing the withdrawal limit to Rs 15,000. We have enough liquidity to serve that demand," Thomas said.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

Read full article
Next Story
Next Story

Also Watch

facebookTwitterskypewhatsapp
Most Active
Company Price Change %Gain
ICICI Lombard 1,207.25 -4.63
Reliance 1,372.35 0.60
BPCL 512.40 4.51
Bajaj Finance 4,016.40 3.53
Indiabulls Hsg 173.05 -8.49
Company Price Change %Gain
ICICI Lombard 1,206.75 -4.77
Indiabulls Hsg 172.90 -8.54
Larsen 1,424.80 -0.58
HDFC 2,050.05 1.83
Yes Bank 41.15 1.35
Top Gainers
Company Price Change %Gain
BPCL 512.40 4.51
Grasim 730.85 3.86
Zee Entertain 259.65 3.57
Bajaj Finance 4,016.40 3.53
ONGC 141.65 2.16
Company Price Change %Gain
Bajaj Finance 4,018.75 3.57
ONGC 141.60 2.05
HDFC 2,050.05 1.83
Coal India 194.65 1.75
HCL Tech 1,100.85 1.55
Top Losers
Company Price Change %Gain
Hero Motocorp 2,602.35 -2.74
Hindalco 187.95 -2.39
Vedanta 149.90 -2.35
Asian Paints 1,765.70 -2.07
NTPC 117.40 -1.68
Company Price Change %Gain
Hero Motocorp 2,603.00 -2.73
Vedanta 149.70 -2.44
Asian Paints 1,765.70 -2.04
NTPC 117.50 -1.63
ITC 243.70 -1.54

Live TV

Countdown To Elections Results
To Assembly Elections 2018 Results