What steps have been taken to help depositors of PMC Bank, HC ask RBI
MUMBAI: The Bombay High Court on Monday sought to know from the Reserve Bank of India (RBI) what measures it has taken to protect the interests of the depositors of the Cooperative Bank (PMC) Punjab and Maharashtra. A bank in the division of judges S C Dharmadhikari and R I Chagla was listening to a lot of petitions filed by bank depositors, challenging the restrictions imposed by the RBI on withdrawals.
On September 23, the RBI imposed regulatory restrictions on the PMC Bank for six months due to alleged financial irregularities. The withdrawal limit for account holders was initially Rs 1,000 for each client for six months, which was then increased to Rs 10,000 and then to Rs 40,000.
On Monday, the bank said it just wanted to know what the RBI was doing in the case.
The RBI knows all the issues of the bank in question. The RBI is the bank of bankers and an expert body in such matters. We do not want to interfere and dilute their authority (RBI), the court said.
He said that in such financial matters, the RBI will be the judge and not the court.
He directed the RBI to present his affidavit and published the matter for an additional hearing on November 19. The court refused to grant any provisional relief in the matter.
One of the petitioners requested instructions from the RBI to allow depositors to access their lockers.
The court, although it refused to approve any order, said: The court cannot allow access. How can we or someone prevent the RBI from taking action? If the RBI says 'stay away from the bank', then do it. He said depositors could sue the bank if they wanted to.
The bank said that by submitting multiple petitions, lawyers should not give false hope to depositors that the courts will help them.
The courts are not magicians. Let's not give false hope to depositors, Judge Dharmadhikari said.
The court said that while it is aware that several depositors stay in the lurch, but neither can it be said that many of the depositors did not know what was happening at the bank.
The petitions have been submitted by people who claim to be depositors and account holders of the bank. RBI restrictions previously caused protests by depositors and account holders of the cooperative lender.
The decision of the RBI is irrational and arbitrary and violates the fundamental rights of the general public. The RBI did not give prior instructions, said one of the petitions.
He said the directives have caused anguish and suffering to people whose hard earned money is locked in the bank.
The petitions sought to annul the decision of the RBI.
The crisis in the bank is attributed to loans granted to the real estate player Housing Development Infrastructure Ltd (HDIL), which were supposedly hidden from the scrutiny of regulators, converting unprofitable assets.
Five people, including HDIL promoters and the bank's senior management, have been arrested.
The Execution Directorate is also investigating the case and has attached the assets of HDIL promoters, Rakesh Wadhawan and his son Sarang Wadhawan, who are in his custody.
More than Rs 6,500 million from the bank's advances of Rs 9,000 million were made to HDIL or affiliated fictitious companies, which have deteriorated.
The bank has deposits of more than Rs 11,000 crore and the RBI has said that 77 percent of depositors can withdraw their money with the limit of Rs 40,000.
The administrator appointed by RBI to oversee the bank's operations is updating the books to present a fair picture of its financial strength.