PMC Bank Crisis: Supreme Court declines plea by depositors to relax withdrawal restrictions

The Supreme Court today declined to entertain the plea seeking the relaxation of withdrawal restrictions for account holders with the Punjab & Maharashtra Co-operative Bank (PMC Bank)..However, the Bench of CJI Ranjan Gogoi and Justices SA Bobde and S Abdul Nazeer gave liberty to the petitioners to approach High Courts instead..Appearing for the Central Government today, Solicitor General Tushar Mehta submitted that the government shares the concerns of the depositors and 88 properties have been attached so far in the matter..The counsel for the petitioners submitted that the petitioners belong to four different States, and hence they have moved the Supreme Court. All the same, the Bench refused to accede and declined the plea..The petitioners had approached the Supreme Court earlier this week, seeking redressal of certain aspects associated with PMC Bank crisis..Among other prayers, the petition filed by Bejon Kumar Misra sought100% insurance coverage for depositors who have accounts in co-operative banks..Last month, the Reserve Bank of India (RBI) had imposed regulatory restrictions on PMC Bank under Section 35A of the Banking Regulation Act. Pursuant to these restrictions, a limit was placed on the amount that could be withdrawn by the bank’s customers. The initial cap on withdrawal of Rs. 1,000 has been gradually increased to Rs. 40,000 over the course of the last two weeks..Stating that the RBI’s move has caused “disastrous consequences” for depositors, the petitioner had also prayed that the notifications issued by the banking regulator be declared ultra vires Articles 14 and 21 of the Constitution..The petitioner had alleged that the Centre and the RBI had not taken any emergency steps towards the protection of the hard-earned money of around 15 lakh customers of PMC Bank..The petition had also called for an overhaul in the functioning of co-operative banks and nationalised banks at a micro and macro level and for the issuance of guidelines to safeguard banking and co-operative deposits in the eventuality of an emergency financial crisis..The key cause for the strict measures against the bank appears to be its exposure of over Rs. 600 crore to real estate firm HDIL, which filed for bankruptcy recently.According to reports, three persons who had accounts in PMC Bank lost their lives over the course of this week.