NEW DELHI: Questions are being asked about possible regulatory lapses on part of the RBI in the case of Punjab and Maharashtra Cooperative Bank (PMC Bank). The finance ministry may take up the issue with RBI soon.
Top finance ministry officials said they would look into all aspects of the PMC Bank case where repeated loans to Housing Development and Infrastructure Ltd (HDIL), which is now facing bankruptcy proceedings, has landed the bank in the dock.
These loans are also being viewed as related party transactions (RPT) that should have been declared long ago.
“The regulator should have asked hard questions much earlier on issues such as RPTs… There could be some fixation of responsibility not only in PMC but also in the regulatory body in case there was an oversight,” said Sanjay Bhattacharyya, former MD of SBI.
Joy Thomas, the now-suspended MD of PMC, on Sunday revealed that 73 per cent of the bank’s net worth (Rs 6,500 crore) was lent to HDIL, an outstanding exposure that should have raised regulatory eyebrows long ago.
“The RBI has two departments that should have reached the same conclusion long ago. It has a very able banking supervision department, which should have pointed out the RPTs, as well as an inspection department that does annual and surprise checks on banks,” said the director of a Delhi-based bank.