Disclose how interests of PMC Bank depositors are protected: HC to RBI

The Bombay high court on Monday directed the Reserve Bank of India (RBI) to file an affidavit disclosing what steps it has taken to protect the interests of depositors

The Bombay high court on Monday directed the Reserve Bank of India (RBI) to file an affidavit disclosing what steps it has taken to protect the interests of depositors of the Punjab and Maharashtra Co-operative (PMC) Bank. The RBI has been asked to file the affidavit by November 13.

HT Image

The court was hearing petitions concerning the fraud at the multi-state cooperative bank and the moratorium imposed by the RBI on withdrawals from the bank. The division bench of justices SC Dharmadhikari and RI Chagla said on Monday, “We are concerned with the steps taken by the RBI for protecting interests of the depositors. We will not look into individual grievances, if we find the steps taken by the RBI were satisfactory.” PMC Bank advanced loans to Housing Development and Infrastructure Limited (HDIL) that were in violation of the single-entity exposure limit (15% of the capital funds of the bank) and the bank had failed to adhere to its directive to classify all HDIL accounts as non-performing assets. On September 23, the RBI imposed a cap of ₹ 1,000 on daily withdrawals. This was subsequently raised and as of October 14, the daily withdrawal limit is ₹40,000.

Most of the petitions have been filed by individuals.

A Wadala resident, with ₹58.50 lakh in savings bank accounts and a fixed deposit with PMC Bank, told the court his daughter’s wedding was in danger of being called off due to shortage of funds. A Sion resident said he needed to access his savings in PMC Bank in order to pay ₹16.5 lakh as fees for a course in which his son has enrolled.

A petition challenging the moratorium has been filed by non-profit organisation Consumer Action Network. During the hearing, the petitioner body alleged the RBI had failed to monitor PMC Bank and the restrictions imposed since September penalised depositors who were no longer able to access their money freely.

Meanwhile, most depositors remain worried and frustrated. “After our protests at the RBI’s branches in Mumbai, we were told the RBI will come out with a release or notification on the ongoing inquiry, but we still have not received anything. There have only been verbal communications from the RBI,” said businessman and PMC Bank customer, Harbans Singh.

Another customer, businesswoman Jitsu Seth, said, “With due respect to the court, all the authorities should see that we are completely helpless. We are just being made to run pillar to post and are receiving only a series of extended deadlines. So, on one hand, we do hope that the court directive to the RBI results into something positive for all depositors, but looking at how things have shaped up till now, I am not sure.”

The next hearing of the case will be on November 19.