Delhi HC seeks PMC Bank's stand on withdrawal limit for depositors

The Delhi High Court has granted two weeks' time to Punjab and Maharashtra Cooperative (PMC) Bank to file an affidavit on the withdrawal limit for its depositors and asked that a procedure be put in place by the Administrator to deal with the applications for release of money. The court suggested that the Administrator of PMC bank could make use of technology to come up with a mechanism that ensures that applications for withdrawal of money are processed within 48 in order to ease some of the difficulties faced by the depositors. A bench of Justices Rajiv Shakdher and Talwant Singh, while dealing with an application by consumer rights activist Bejon Kumar Misra for release of emergency funds to meet the financial needs of the depositors, has also asked the Reserve Bank of India to state the timeline within which a Small Finance Bank (SFB) would be set up for its merger with the distressed bank. The application forms part of a petition for directions to RBI to ease the moratorium on withdrawals from the PMC Bank during the coronavirus pandemic.

Senior counsel Jayant Bhushan, appearing for the RBI, stated that once an SFB is set up, there is a possibility that PMC bank will merge with the same, and thus, most difficulties presently faced by the depositors of the bank would get addressed.

"Mr. Jayant Bhushan (senior counsel for RBI) will take fresh instructions with regard to the timeline, for setting up the SFB and its merger with the PMC bank," said the bench in its order dated September 23.

Counsel for the petitioner, Shashank Deo Sudhi, submitted that definitive timelines have to be fixed in the matter as the depositors were suffering on account of not being able to withdraw their own money which they had deposited with the PMC bank.

RBI contended that in view of the court's order passed in January this year, the present withdrawal limit of Rs one lakh cannot be breached by the depositors except in the situation of meeting medical expenses for undergoing treatment of life-threatening diseases when the withdrawal of up to Rs five lakhs is allowed. The court, however, said that the order "does not read in the manner, in which Bhushan seems to suggest". Counsel for PMC Bank Aditya Madan stated that he would like to bring on record certain subsequent facts, which may help the cause of the depositors/customers as there is perhaps a decision being taken to enhance the withdrawal limit, beyond Rs one lakh.

"Mr Madan, however, says that he would like to take fresh instructions in the matter, and would file an affidavit, on that behalf. Leave, on that behalf, is granted," the court said.

"Furthermore, Mr. Madan will ensure that a procedure is put in place by the Administrator of the PMC bank, so that the application(s) tendered by the depositor(s)/customer(s), for release of their money, at least, in terms of directives, which are presently in place, are dealt with, at the earliest," it added. In July this year, RBI had told the court that it has given in-principle approval for setting up a small finance bank, which will take over the scam-hit PMC Bank soon.

The high court had earlier said that according to the Supreme Court's decision on withdrawal of money by depositors of PMC bank for exigencies, exceptions can be carved out for urgent medical and educational requirements.

The court had asked the depositors, whose needs have been highlighted before the court in the PIL, to once again approach the RBI-appointed administrator of PMC bank giving details of their financial needs along for medical or educational reasons within three weeks.

Earlier, RBI had argued that while it sympathises with the plight of the depositors, but everyone would have some or other financial emergency and if money to the tune of Rs five lakh was released to all, as provided in case of medical emergencies, the bank would be in difficulty and depositors would not get their entire deposits back.

RBI had said it was trying to keep the bank functioning in the interests of the depositors and had floated an expression of interest for investing in it and has received some bids.

The PMC Bank has been put under restrictions, including limiting withdrawals, by the RBI, following the unearthing of a Rs 4,355-crore scam. The matter would be heard next on October 27.PTI ADS RKS RKS

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)