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“The Bombay High Court has directed the Reserve Bank of India (RBI) to file an affidavit by 13 November, in pleas filed by account holders hit by a Rs 4,355-crore scam in the Punjab and Maharashtra Co-Operative Bank, seeking to quash limits put on withdrawals for a period of six months.”
“The court’s direction came in response to a petition filed by Haresh Raisinghani, Prajakta Waikar and others on behalf of the aggrieved depositors. The Court will hear all matters related to the PMC Bank crisis together on November 19.”
The petitioners sought directions to the Deposit Insurance and Credit Guarantee Corporation to make sufficient funds available for easy and unhindered withdrawal of their deposits for day to day expenses for educational and health and business purposes.
“The pleas were heard on Monday, by a division bench comprising Justices SC Dharmadhikari and RI Chagla. Justice Dharmadhikari said if the court is satisfied with RBI’s reply, it will not interfere in the matter and further said that the court cannot issue directions to the RBI at the moment.”
“””We are not magicians. Do not give false hopes to the people standing behind you (account holders). If we are satisfied with RBI’s reply, we will not interfere further. We only want to know what RBI has done and is doing and we will not interfere and dilute RBI’s authority””, Justice Dharmadhikari said.”
“Senior Counsel Venkatesh Dhond, appearing for RBI submitted that the Central Bank will file an affidavit in this regard within a week. Advocate Tamsin Monis, appearing for the petitioners Prajakta Waikar submitted that depositors are unable to access their bank lockers and sought directions in that regard. To this, the Court said that it cannot issue directions and the petitioner can approach the bank.”
“The petitioners in their writ pleas and Public Interest Litigation highlighted that the RBI restriction on the PMC Bank is detrimental to account holders or depositors at large, who have invested their own hard-earned money in the Bank.”
“The pleas stated that the RBI’s decision under Section 35 (A) of the Banking Regulation Act, 1949 taken under the guise of ‘public interest’ deprives depositors their rights to have access to their own property, which itself is contradictory with the provisions of the Act.”
“Besides, Consumer Action Network in its plea, submitted that the Banking Regulation Act is very clear in terms of public interest and it cannot be interpreted as to penalize the public in general. Calling this RBI directive irrational and arbitrary, the petitioners claimed that the same is violative of Articles 14, 19 and 21 of the Constitution of India. The pleas also sought the framing of strict banking regulations.”
The RBI had recently ordered the PMC bank not to do any business for six months and put withdrawal limit on account holders/depositors of the bank for a period of six months.
Many depositors had called on Shiv Sena MLA Ravindra Waikar after RBI imposed restriction on withdrawal of money from the P & Coop Bank. Waikar had a meeting with Maharashtra Chief Minister Devendra Fadnavis on first October. Subsequently a writ petition was filed on his behalf on 11 October. Subsequently Waikar wrote to RBI’s Executive Director Dr Ravi Mishra and also held discussions with RBI General Manager Uma Shankar.
“In the meanwhile, RBI has raised withdrawal limit for account holders to Rs. 50,000 from earlier withdrawal limit of Rs. 40,000, RBI in a recent press release stated “”The Reserve Bank of India, after reviewing the bank’s liquidity position and its ability to pay its depositors has decided to further enhance the limit for withdrawal to Rs. 50,000, inclusive of Rs. 40,000 allowed earlier. With the above relaxation, more than 78 per cent of the depositors of the bank will be able to withdraw their entire account balance,”” .”
“The RBI has also allowed PMC Bank account holders to withdraw money from the bank’s own ATMs within the prescribed limit of Rs. 50,000. “”This is expected to ease the process of withdrawals,”” RBI said. Last month, the RBI had raised the withdrawal limit for PMC Bank depositors to Rs. 40,000. This is the fourth time the regulator has increased the withdrawal limits since it clamped down on the bank on September 23 and capped withdrawal limit at Rs. 1,000 per customer for six months.”
“In another development, Surjit Singh Narang (71), one of the directors of P & M Coop Bank, claimed in his anticipatory bail plea before additional sessions judge S T Soor. The FIR registered by the EOW did not name him, but it was “”wide enough”” to include him, his plea said. He was one of the promoters and share-holders of the bank, but not involved in its “”day-to-day operations””, Narang claimed and added that he was not aware of the loans given to HDIL, and there was nothing to show that he was connected with alleged “”falsification of records and concealment of information””.”
“Besides Narang, another director of the bank, Parmeet Sodhi, has also sought pre-arrest bail. Both the pleas would be heard on November 8.”
“The Economic Offences Wing (EOW) of Mumbai Police has arrested five persons in the Rs 4,355 crore PMC scam, including promoters of realty group HDIL and top bank officials. The EOW alleged that the bank management, in cahoots with the Wadhawans, concealed from the banking regulators’ scrutiny huge loan defaults by the HDIL group firms. The ED has also registered a money laundering case, based on the FIR registered by the EOW.”
“The promoters of Housing Development Infrastructure Limited’s (HDIL)-Rakesh Wadhawan and his son Sarang Wadhawan, have also been arrested and remanded to judicial custody by the special Prevention of Money Laundering Act (PMLA) court. The matter is being heard by the Judge P Rajvaidya.”
“As per the EOW, the bank management concealed from the banking regulator’s scrutiny huge loan defaults by HDIL group firms, replacing 44 loan accounts of the group with 21,049 fictitious accounts.”
