Delhi HC adjourns plea seeking enhancement of PMC Bank withdrawal limit.

Source – devdiscourse.com

The Delhi High Court adjourned the hearing on a petition seeking enhancement of withdrawal limits in Punjab and Maharashtra Co-operative (PMC) Bank. A Division Bench of Justice D N Patel and Justice C Harishankar deferred the matter for April 21 after the petitioner sought time to file rejoinder in the matter contending that he received the copy filed by the respondent, Reserve Bank of India (RBI), yesterday.

The RBI had on Tuesday told the Delhi High Court that restrictions imposed on withdrawal limits on customers is based on the bank’s liquidity position and ability to pay its depositors. The RBI, in its affidavit, told the court that direction regarding restrictions on withdrawal limits of deposits and to stop indiscriminate lending in the interregnum and to restrict payment of deposits was based on available liquidity to prevent any discretionary and discriminatory payment to the small body of depositors.

The central bank’s response came on a petition filed by Bijon Kumar Mishra, who has challenged withdrawal limits in the PMC Bank. The RBI also told the court that all concerned authorities were working in close co-ordination for speedier resolution of the crisis and therefore no intervention from the court was desired at this juncture.

The RBI said it has taken all possible steps to protect the interest of the depositors and has initiated action against whosoever is responsible for the financial crisis. “The steps taken by RBI are not arbitrarily in nature. Directions under Section 35A of the Banking Regulation Act 1949 (AACS) were issued in view of the large scale irregularities and wrongdoings committed by the bank to prevent further detention of the bank’s financials and also aim at protecting the interest of depositors,” the RBI said in its reply.

RBI also told the court that Bombay High Court had dismissed a similar plea. It said that the petition is devoid of merits and as such deserves to be dismissed with exemplary costs. “The petition is totally misconceived. RBI has not violated any fundamental, legal or statutory rights of the petitioners for invoking Article 226 of the Constitution of India against RBI and as such the present petition was filed against the answering respondent (RBI) is not maintainable under Section 226 of the Constitution of India.”

Mishra in his petition filed through advocate Shashank Dev Sudhi has also sought a direction to ensure the money of victim depositors lies safely in the bank. The petitioner also sought directions to all respondents seeking complete insulation and insurance of the hard-earned deposited money of the common people in various co-operative banks including nationalized banks by enacting an appropriate measure in nature of 100 per cent insurance coverage towards their “hard-earned” deposited amount.

In his plea, Mishra sought directions from the court to constitute a high-powered committee to look into the working and operation of all co-operative banks in order to have a robust and transparent mechanism that can inspire the confidence of the common people in co-operative banks. In September last year, the RBI restricted the activities of the PMC Bank for six months and asked it not to grant or renew any loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits after an alleged fraud of Rs 4,355 crore came to light.

The central bank had initially capped the deposit withdrawal at Rs 10,000 but later raised it to Rs 40,000. The Enforcement Directorate (ED) has seized and identified movable and immovable assets worth more than Rs 3,830 crore owned by HDIL in connection with the case.