Addressing the media on Friday, Thomas said the bank’s total exposure to HDIL was Rs 2,500 crore. This single group accounted for 31% of the bank’s entire loan book of Rs 8,300 crore as on March 2019. “We have been lending to HDIL since 1989. The breach in exposure limit was not reported to RBI for six-seven years,” said Joy. He added that for the last three years, although the repayment was irregular, the bank did not report the advances as NPAs as it held security worth twice the value of the loan.
“Our intention was to grow fast. We did not disclose our exposure because that would have created a
run on the bank,” said Thomas. According to Thomas, the bank advanced an additional Rs 96 crore to the promoters of HDIL last month despite the company being admitted for proceedings under the Insolvency and Bankruptcy Code. “We extended the loan to protect our security and prevent it from being part of bankruptcy proceedings,” said Thomas.
Although Thomas said that the board was not involved in the lending decisions, he did not touch upon chairman Waryam Singh’s conflict of interest. Singh was chairman of the bank between 1999 and 2005 and again took charge in 2015.
At the time he took charge the second time, the bank was overexposed to HDIL. According to disclosures made by HDIL at Bombay Stock Exchange, Singh sold 79.9 lakh shares in HDIL representing a 1.9% stake on March 22. Thomas said that the decision to lend to HDIL was taken at the bank’s central office and there was no pressure to disburse the loan. According to the suspended CEO, the bank has 1,754 cooperative credit societies as customers and 15,000 cooperative housing societies.