Debt-ridden Housing Development & Infrastructure Ltd (HDIL) plunged to a record as regulators examined the scale of the real estate developers borrowings from a lender that was sanctioned by the Reserve Bank of India (RBI).
HDILs shares, which have plummeted 85 per cent this year, dropped 4.8 per cent at 10:53 a.m. in Mumbai. The RBI, last week, had curbed deposit withdrawals from Punjab & Maharashtra Co-operative Bank Ltd (PMC) for six months. They cited major financial irregularities, failure of internal controls, and wrong and under-reporting of exposures.
About a third of the banks loans were given to HDIL, K Joy Thomas, former managing director of Punjab & Maharashtra Cooperative, said. Banks are mandated to limit loans to a single borrower at less than one-fifth of their total exposure. The RBI has since removed the management of the lender.
The loans from the cooperative bank helped HDIL delay insolvency proceedings, Thomas said. Punjab & Maharashtra Cooperative has 137 branches in six Indian states.