Adequate security cover provided for loans taken from PMC Bank: HDIL

HDIL said it was facing temporary cash flow issues due to the external environment in the real estate sector

Housing Development & Infrastructure (HDIL) on Tuesday said it had provided adequate security cover for the loans taken from Punjab and Maharashtra Co-operative (PMC) Bank.

PMC Bank lent Rs 6,500 crore to HDIL, accounting for 73 per cent of the bank's loan book.

“The company (HDIL) has over a period of time availed of banking facilities from various banks and institutions including PMC Bank in the normal course of business. 

Adequate security cover in favour of the banks, including PMC Bank, has been created over the assets of the company for these facilities in due compliance with all banking regulations as per guidelines described by RBI,” the property developer said in a statement to the exchanges on Tuesday.

A letter, signed by company Vice-Chairman and Managing Director Sarang Wadhawan, said the books of the company were audited and that they "reflect a fair picture as regards to the affairs of the company and the group".

HDIL said it was facing temporary cash flow issues because of the external environment in the real estate sector which has caused the firm to be admitted for insolvency, an issue it is actively attempting to resolve.

"With relation to borrowings from PMC, we have already issued letters requesting an appointment with the administrator in charge of the bank to put forth the true and correct picture as also to discuss a strategy hereby the interest of all stakeholders and in particular PMC Bank and its depositors is protected," it added.

"It is also learnt that certain action is being initiated against HDIL and its promoters. We are unaware of any such action."

The economic offences wing of the Mumbai police on Monday booked the promoters of HDIL and officials of PMC Bank in connection with the irregularities at the bank, reports said. A lookout circular has also been issued against Sarang and Rakesh Wadhawan.

The company's stock fell 5 per cent on Tuesday to end the day at Rs 3.8 a share.