Published 08:57 IST, May 30th 2020
Delhi HC asks Centre, RBI to consider issues faced by scam-hit PMC bank depositors
Delhi HC has asked the Centre and RBI to take into account the difficulties faced by depositors of scam-hit PMC bank with regards to moratorium on withdrawals.
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Delhi High Court has asked the Centre and Reserve Bank of India (RBI) to take into account the difficulties faced by depositors of scam-hit Punjab and Maharashtra Cooperative (PMC) Bank Ltd with regard to moratorium on withdrawals amid the COVID-19 crisis.
HC directive
"In view of this limited submission, we direct the concerned respondents to appreciate the difficulties raised by the applicant/ petitioner with respect to the moratorium on withdrawal and decide the same in accordance with law, rules, regulations and Government policy applicable to the facts of the case," the bench said on Thursday while disposing of the 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 the concerned respondent authority within a period of four weeks".
Consumer rights activist Bejon Kumar Misra had filed the petition seeking directions to RBI to ease out the moratorium for withdrawal of money by depositors with the PMC Bank during the coronavirus crisis. The PMC Bank has been put under restrictions by the RBI, following the unearthing of a Rs 4,355-crore scam.
PMC Bank Scam
On September 21, the RBI took control of the government-run Punjab and Maharashtra Cooperative (PMC) Bank bank for six-months capping withdrawals at ₹1,000 per account and disallowing the bank to make any fresh loans for six months. After several depositors protested in front of the government and the RBI, the withdrawal limit was increased to Rs. 40,000.
Moreover, the Supreme Court also stayed the Bombay High Court order directing sale of bankrupt HDIL to ensure repayment of dues and refused to the RBI-sanctioned limits on withdrawal. The Maharashtra government has been mulling over the merger of scam-hit PMC bank with Maharashtra State Co-operative (MSC) Bank while the RBI is yet to announce any scheme to revive the state-run bank.
After the takeover, PMC Bank had admitted that one large account -- Housing Development and Infrastructure Ltd (HDIL) -- was the sole reason for the present crisis. Following this, the HDIL directors Sarang Wadhawan and Rakesh Kumar Wadhawan were arrested by the Mumbai Police's Economic Offences Wing and the ED in connection with a fraud of over Rs 4,355 crores.
PMC Bank officials gave loans to HDIL between the year 2008 and August 2019 despite none payment of previous loans. Six depositors' deaths have occurred due to insufficient cash since then. PMC Bank, which had Rs. 11,500 crore deposited in its 137 branches, has already depleted to Rs 200 crores as Tax officials asked the bank to pay TDS. Meanwhile, the Central government has sought to improve the situation by introducing the Banking Regulation (Amendment) Bill, 2020 to strengthen cooperative banks by increasing professionalism, enabling access to capital, and improving governance.
08:57 IST, May 30th 2020