(This story originally appeared in on Sep 27, 2019)

The developer whose company defaulted on a Rs 2,500-crore loan provided by the Punjab and Maharashtra Cooperative Bank (PMC) was granted a personal loan of Rs 96.5 crore by the bank just a month before it went under. Documents accessed by Mumbai Mirror revealed the bank facilitated a personal loan to Sarang Wadhawan, vice-chairman and managing director of debt-ridden real estate firm Housing Development and Infrastructure (HDIL), in August. This was over and above the Rs 2,500-crore loan that HDIL had stopped repaying, and which PMC Bank failed to classify as non-performing asset (NPA).The Reserve Bank of India (RBI), which yesterday raised the withdrawal limit of PMC Bank account-holders from Rs 1,000 to Rs 10,000, put crippling restrictions on PMC Bank on Tuesday citing massive under-reporting of NPAs by its auditors. Mumbai Mirror was the first to report that just one account -- HDIL – was the sole reason for the PMC Bank’s troubles, which was subsequently confirmed by the bank’s managing director, Joy Thomas.It has now emerged that HDIL and Wadhawan took loans from PMC Bank to pay off the Bank of India (BoI), which had initiated bankruptcy proceedings against the firm for allegedly defaulting on loans of around Rs 520 crore. BoI moved the National Company Law Tribunal (NCLT) against HDIL last August but withdrew the petition after it reached an agreement with the firm to settle the account. The bank submitted a fresh petition against HDIL in the tribunal after the company couldn’t meet the August 2019 deadline to settle the account.On August 31, BoI announced that it was suspending the bankruptcy proceedings against HDIL for another two weeks after it received two pay orders worth Rs 96.5 crore from the company. The bank acknowledged the receipt of the pay orders, which were issued by PMC Bank.Sources in the RBI said that PMC Bank’s total lending was around Rs 8,300 crore, and the exposure to HDIL alone stood at 31%, more than double the percentage laid down by the Reserve Bank. The RBI guidelines say that banks cannot lend beyond 15% of its total exposure to an individual/company.JB Bohria, the RBI administrator looking into the PMC Bank mess , refused to confirm whether the personal loan of Rs 96.5 crore to Wadhawan was the trigger for initiating action against the bank. Emails and text messages to the HDIL Group spokesperson remained unanswered till the time of going to press.