A group of depositors at the Punjab and Maharashtra Co-operative Bank have filed a PIL before the Bombay High Court seeking directions to the Reserve Bank of India to remove withdrawal restrictions imposed on account holders at PMC after the bank disclosed certain irregularities to the central bank.
RBI had imposed such withdrawal restrictions under Section 35A of the Banking Regulation Act, 1949 in two notices dated September 23 and 26, 2019. At first the limit was set at Rs.1000 and was later increased to Rs.10,000.
The PIL has been filed by Consumer Action Network, an organization working in the field of consumer rights and nine account holders at the PMC bank.
Referring to newspaper reports, petitioners stated that a loan of Rs. 2,500 crore was given to real estate firm HDIL, which has defaulted on repayment from the last 2 years and is currently undergoing insolvency proceeding. Also, besides defaulting to repay Rs. 2,500 crore loan, personal loan of Rs. 96.5 crore was also granted by PMC Bank to Vice Chairman and Managing Director of HDIL.
Thereafter, the petition refers to a report by the Times of India wherein the suspended MD, PMC Bank disclosed that the said bank has is owed over Rs. 6,500 crore to HDIL which is four times the regulatory cap of 73% of its entire assets of Rs. 8,880 crore.
Calling RBI's action arbitrary, petitioners alleged that it is in violation of Articles 14, 19, 21, and 300 A of the Constitution of India.
"Instead of holding the amount of account holders of PMC Bank, the RBI should assess the recovery of advanced amount by the bank to HDIL a real estate firm, liquidity and/or secured assets provided by HDIL at the time of availing loans from PMC.
Instead of causing hardship and inconvenience caused to lakhs of Account holders of PMC, the defaulting and sole account which has been the only reason for this Regulating direction i.e. HDIL account be assessed by the RBI as regulatory body. Restricting thousands of crores of rupees of account holders will not be fruitful and there being no nexus why account holders deposit should be restricted in default of HDIL default of paying loans."
Thus, the petitioners sought quashing of RBI's restrictions on the bank and its account holders.
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