Ministry of Corporate Affairs initiates probe into HDIL
HDIL has been at the center of the crisis at PMC Bank which reportedly did not disclose that its exposure to HDIL was about Rs 6,226 crore or 73% of the bank’s total loan book.
The ministry of corporate affairs has initiated a probe into Housing Development and Infrastructure Ltd (HDIL) according to a senior government official.
HDIL has been at the center of the crisis at Punjab and Maharashtra Cooperative (PMC) Bank which reportedly did not disclose that its exposure to HDIL was about Rs 6,226 crore or 73% of the bank’s total loan book. RBI regulations limit single entity exposure for banks to 15% of capital funds.
“It is quite natural that if a bank has sunk because of excessive exposure to a particular company for years together, how it is managing its affairs deserves to be looked into,” said a senior government official who did not wish to be named.
Mumbai–based PMC bank which has operations in seven states, collapsed recently and the RBI ordered it to freeze its operations and imposed limits on withdrawals of funds by depositors. The central bank also appointed former regulator J.B. Bhoria as administrator.
The official added that the MCA would be looking into the book of accounts, internal financial controls and disclosures made by the company.
“There are serious issues obviously on the face of it. We have to see whether it is a business failure or if there are some other issues,” said the official adding that once the government receives the preliminary investigation report, it would decide whether a deeper probe was required.
Separately, the MCA is also set to receive a report on the debt-ridden Dewan Housing Finance Limited this week, according the official quoted above.
The report is almost completed. As far as the MCA proceedings are going one the ministry is looking at financial transactions as to whether there are any financial irregularities. As soon as the report is submitted the MCA will take a call on the next steps.
The lenders of DHFL are currently attempting to reach an agreement to resolve the housing finance company's Rs 1 lakh crore debt obligations.
Defaults by DHFL and Infrastructure Leasing and Financial Services sparked a liquidity crunch in the NBFC sector.
The ministry of corporate affairs has initiated a probe into Housing Development and Infrastructure Ltd (HDIL) according to a senior government official.
HDIL has been at the center of the crisis at Punjab and Maharashtra Cooperative (PMC) Bank which reportedly did not disclose that its exposure to HDIL was about Rs 6,226 crore or 73% of the bank’s total loan book. RBI regulations limit single entity exposure for banks to 15% of capital funds.
“It is quite natural that if a bank has sunk because of excessive exposure to a particular company for years together, how it is managing its affairs deserves to be looked into,” said a senior government official who did not wish to be named.
Mumbai–based PMC bank which has operations in seven states, collapsed recently and the RBI ordered it to freeze its operations and imposed limits on withdrawals of funds by depositors. The central bank also appointed former regulator J.B. Bhoria as administrator.
The official added that the MCA would be looking into the book of accounts, internal financial controls and disclosures made by the company.
“There are serious issues obviously on the face of it. We have to see whether it is a business failure or if there are some other issues,” said the official adding that once the government receives the preliminary investigation report, it would decide whether a deeper probe was required.
Separately, the MCA is also set to receive a report on the debt-ridden Dewan Housing Finance Limited this week, according the official quoted above.
The report is almost completed. As far as the MCA proceedings are going one the ministry is looking at financial transactions as to whether there are any financial irregularities. As soon as the report is submitted the MCA will take a call on the next steps.
The lenders of DHFL are currently attempting to reach an agreement to resolve the housing finance company's Rs 1 lakh crore debt obligations.
Defaults by DHFL and Infrastructure Leasing and Financial Services sparked a liquidity crunch in the NBFC sector.
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