PMC Bank Vs Yes Bank’s Depositors: How Are They Different? Delhi High Court Asks RBI, Government
The Delhi High Court has directed the Reserve Bank of India and the central government to explain the reasons behind approving and funding the reconstruction scheme for Yes Bank.
A single judge bench of the high court directed both to file an affidavit explaining ‘’as to what propelled it to take action in the “public interest” to secure the interests of the depositors of Yes Bank and the reason why the UOI (Union of India) accorded sanction to the reconstruction scheme.’’
The petition was filed by a PMC Bank depositor, Sandeep Bhalla, who had approached the court seeking to secure the interests of PMC Bank’s depositors.
After the petitioner argued that the central government had infused funds in a private bank, the court asked the government whether it intends to extend any financial support to PMC Bank.
The central government responded that it had not infused any funds in Yes Bank. But during the hearing on Friday, the high court noted that the government had filed a literal reply to its query; and that the government and the RBI had a crucial role in permitting and funding the reconstruction scheme.
The court has also asked the government to explain how the depositors of PMC Bank are differently circumstanced compared to Yes Bank’s depositors.
The central government had notified the reconstruction scheme for Yes Bank on March 14, 2020 which included details of investment by the State Bank of India.
‘’State Bank of India, termed as the ‘investor bank’ shall invest in the reconstructed bank at a price of Rs 10, subject to the “condition that post infusion of equity capital, the equity shareholding of the investor bank shall not be less than 26% and not more than 49%,” the notification had said
The Delhi High Court in Sandeep Bhalla’s petition has also asked the government to highlight the shares it holds in SBI and the representation it has on the SBI’s board of directors.
The high court will hear the case next on Aug. 6, 2020.