Punjab Maharashtra Cooperation (PMC) Bank did not report the financial exposure to the Reserve Bank of India (RBI) for over six years, suspended MD, Joy Thomas admitted on Friday.
"We have been doing business with HDIL since 1989. We kept it (exposure) undisclosed to avoid chaos, a situation from which we would not have been able to recuperate. We went to the RBI seeking time to resolve the issue but they went in a different direction," Mr Thomas said in a press conference.
He said that the breach in exposure limit was not reported to the RBI for six to seven years.
"We wanted the involvement the deputy governor of RBI but we were only able to meet the executive director. We had approached the RBI hoping they would give us a resolution plan and allow us more time to resolve the issue," Mr Thomas said.
The former MD said that a small group of people in the bank were aware of the unreported NPAs but the board did not know about the development.
"For the past few years, even though the repayment was irregular, the bank did not report the advances as NPAs because we had been updating our security. We had enough security. Even last week we had added some security in the account," he said.
He also assured people that this is not a fraud and their money will not be lost.
"Whatever has happened is not a fraud, nobody has run away with the money without providing security, it is a technical matter which could have been managed better," he said accusing the RBI of failing to manage the situation in a better manner.
Mr Thomas also mentioned that the bank has an exposure of Rs 2,500 crore to HDIL, which is almost a third of its loan book.
RBI had, on Thursday, increased the withdrawal limit from Rs 1,000 to 10,000 after several bank account holders protested against the move outside the Sion branch in Mumbai.
On Monday, the central bank had restricted activities of PMC Bank for six months citing major financial irregularities, failure of internal control and under-reporting of its exposures under various off-site surveillance reports.