Delhi HC asks Centre, RBI to consider issues faced by scam-hit PMC bank depositors

Delhi High Court has asked Centre and Reserve Bank of India (RBI) to take into account difficulties faced by depositors of scam-hit Punjab and Maharashtra Cooperative (PMC) Bank Ltd with regard to moratorium on withdrawals amid COVID-19 crisis.

READ: PMC Bank Crisis: ED Court Denies Bail To HDIL Promoter Rakesh Wadhawan Amid COVID-19

HC directive

"In view of this limited submission, we direct concerned respondents to appreciate difficulties raised by applicant/ petitioner with respect to moratorium on withdrawal and decide same in accordance with law, rules, regulations and Government policy applicable to facts of case," bench said on Thursday while disposing of petition.

A bench of Chief Justice DN Patel and Justice Prateek Jalan states that upon receipt of any representation from any individual or group of depositors in this regard, "a decision shall be taken by concerned respondent authority within a period of four weeks".

Consumer rights activist Bejon Kumar Misra had filed petition seeking directions to RBI to ease out moratorium for withdrawal of money by depositors with PMC Bank during coronavirus crisis. PMC Bank has been put under restrictions by RBI, following unearthing of a Rs 4,355-crore scam.

READ: PMC Bank Scam Vs Yes Bank Moratorium: Key Differences Between Two Recent Banking Crises

PMC Bank Scam

On September 21, RBI took control of government-run Punjab and Maharashtra Cooperative (PMC) Bank bank for six-months capping withdrawals at ₹1,000 per account and disallowing bank to make any fresh loans for six months. After several depositors protested in front of government and RBI, withdrawal limit was increased to Rs. 40,000.

Moreover, Supreme Court also stayed Bombay High Court order directing sale of bankrupt HDIL to ensure repayment of dues and refused to RBI-sanctioned limits on withdrawal. Maharashtra government has been mulling over merger of scam-hit PMC bank with Maharashtra State Co-operative (MSC) Bank while RBI is yet to anunce any scheme to revive state-run bank.

READ: Court Denies Interim Bail To Rakesh Wadhawan In PMC Bank Scam

After takeover, PMC Bank had admitted that one large account -- Housing Development and Infrastructure Ltd (HDIL) -- was sole reason for present crisis. Following this, HDIL directors Sarang Wadhawan and Rakesh Kumar Wadhawan were arrested by Mumbai Police's Ecomic Offences Wing and ED in connection with a fraud of over Rs 4,355 crores.

PMC Bank officials gave loans to HDIL between year 2008 and August 2019 despite ne payment of previous loans. Six depositors' deaths have occurred due to insufficient cash since n. PMC Bank, which had Rs. 11,500 crore deposited in its 137 branches, has already depleted to Rs 200 crores as Tax officials asked bank to pay TDS. Meanwhile, Central government has sought to improve situation by introducing Banking Regulation (Amendment) Bill, 2020 to strengn cooperative banks by increasing professionalism, enabling access to capital, and improving governance.

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