PMC Bank Case: Bombay High Court Asks RBI To Detail Steps Taken To Help Depositors
Customers read a notice issued by RBI on the shutters of a PMC Bank ATM in Mumbai. (Photo: BloombergQuint)

PMC Bank Case: Bombay High Court Asks RBI To Detail Steps Taken To Help Depositors

The Bombay High Court on Monday sought to know from the Reserve Bank of India what steps the central bank has taken to protect the interests of depositors of the crisis-hit Punjab and Maharashtra Cooperative Bank.

A division bench of Justices SC Dharmadhikari and RI Chagla was hearing the petitions filed by PMC Bank depositors, challenging withdrawal limits put in place by the RBI.

The petitioners had challenged on grounds that the trading curbs imposed by the RBI had caused undue hardship to them. They also said the directives issued by the central bank were in violation of the Multi State Cooperatives Act and beyond the scope of the Banking Regulation Act.

So, the petitioners sought the following directions from the high court:

  • Quash the directives issued by the RBI in September that had affected the rights of the deposit holders.
  • Quash the directions that had imposed restrictions on withdrawal of deposits in access of amounts stipulated by the RBI.
  • Direct the RBI and Deposit Insurance Corporation to make sufficient funds available to the bank for easy withdrawal of deposits.
  • Granting of an interim stay on operation and implementation of directives issued by the RBI till the final hearing and disposal of the petition.

On Sept. 23, the banking regulator imposed regulatory restrictions on PMC Bank for six months over alleged financial irregularities. The withdrawal limit for account holders was initially set at Rs 1,000 per customer for six months, which was later raised to Rs 10,000 and then to Rs 40,000.

On Monday, the Bombay High Court said it only wanted to know what the RBI was doing in the PMC Bank case. “The RBI knows all the affairs of the bank in question. The RBI is the bankers’ bank and an expert body on such issues. We don’t want to interfere and dilute your (RBI’s) authority,” the court said.

In such financial issues, the RBI will be the judge and not the court, the Bombay High Court said, and directed the central bank to file an affidavit in the matter.

The court, however, refused to grant any interim relief in the PMC Bank case and asked the RBI to file replies before Nov.14. The high court will issue further directions based on the replies provided to it by the central bank.

The matter will be heard next on Nov. 19.

(With inputs from the PTI.)

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