PMC Bank Crisis: Account holders move Bombay HC seeking relief from RBI restrictions

A Public Interest Litigation has been filed before the Bombay High Court seeking relief from the restrictions put by the Reserve Bank of India (RBI) on the account holders of Punjab and Maharashtra Co-operative Bank (PMC Bank)..Consumer Action Network (CAN), a Mumbai based Non-Governmental Organisation (NGO), along with nine account holders of the PMC Bank have filed a plea seeking to quash the curbs put by the RBI on the Bank, limiting withdrawals to not more than Rs. 10,000 for a period of six months..The aggrieved parties include account holders from Thane and Mumbai who work as lawyers, chartered accountants, activists. They have 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 plea argues 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. It is submitted that the Banking Regulation Act is very clear in terms of public interest and it cannot be interpreted as to penalise the public in general..The RBI had recently ordered the PMC bank not to do any business for six months and that account holders/depositors of the Bank could withdraw only up to Rs 10,000 for the period of six months..Calling this RBI directive irrational and arbitrary, the petitioners have claimed that the same is violative of Articles 14, 19 and 21 of Constitution of India. The plea also seeks the framing of strict banking regulations..The petition further states that the reasons for imposing the RBI’s restrictive measures are ambiguous and that they do not provide detailed information on the nature of the irregularities committed by PMC Bank. While this is the case, the petition filed by advocate Eknath Dhokale states that lakhs of people are suffering due to default committed by PMC Bank. The petitioners have asserted that the public has the right to know whole facts as well as the genuineness and merits of alleged irregularities..Further, the petitioners have sought directions from the Court to constitute an RBI Committee of Experts and investigate into the misappropriation of public funds. It has been prayed that the Court direct the RBI to give detailed reasons for their action against account holders of PMC Bank and to submit a report with regard to an on-going financial audit of the books of account of the Bank..The PMC Bank is a multi-state scheduled Urban Co-operative Bank started in 1984. It received ‘Scheduled Status’ in the year 2000. The Bank currently has over 130 branches in seven states. It has around 51, 601 members, with a total deposit base of over Rs. 11,000 Crore and advances of over Rs. 8,383 crores..Image courtesy: Business Today