Court won’t interfere in PMC affairs
Bombay High Court on Monday asked the Reserve Bank of India what steps it has taken to protect the interests of depositors of the crisis-hit Punjab and Maharashtra Cooperative Bank, but made it clear it didn’t want to interfere with the central bank's authority.
“The RBI knows all the affairs of the bank in question. The RBI is the bankers’ bank and an expert body on such issues. We don’t want to interfere and dilute your (RBI's) authority,” the court said.
In such financial issues, the bench of Justices S.C. Dharmadhikari and R.I. Chagla added, the RBI will be the judge and not the court.
The bench was hearing a bunch of petitions that some people who claimed to be depositors and accountholders had filed, challenging restrictions the RBI had imposed on withdrawals.
On September 23, the RBI had imposed regulatory restrictions on PMC Bank for six months over alleged financial irregularities. The withdrawal limit for accountholders had initially been fixed at Rs 1,000 for each customer for six months, a cap later raised to Rs 10,000 and then to Rs 40,000.
The bank has deposits of over Rs 11,000 crore and the RBI has said that 77 per cent of the depositors can withdraw their money within the Rs 40,000 limit.
The bench said it only wanted to know what the RBI was doing in the matter, directed the central bank to file an affidavit and fixed November 19 for the next hearing.
The court refused to grant any interim relief.
One of the petitioners had sought a directive to the RBI to permit depositors to access their lockers. The court, while refusing to pass any order, said: “The court cannot allow access. How can we, or anyone, prevent the RBI from taking action? If the RBI says ‘stay away from the bank’, then do so.”
It said the depositors could sue the bank if they wanted to.
The bench asked lawyers not to give depositors false hopes that courts would help them by filing multiple petitions. “Courts are not magicians. Let us not give false hopes to the depositors,” Justice Dharmadhikari said.
The crisis at the bank is attributed to loans made to realty player Housing Development Infrastructure Ltd (HDIL). Over Rs 6,500 crore of the bank’s advances of Rs 9,000 crore were made to either HDIL or dummy companies affiliated to it.
Five persons, including the promoters of HDIL and the bank’s top management, have been arrested.
The Enforcement Directorate too is investigating the case and has attached the assets of the promoters, Rakesh Wadhawan and his son Sarang Wadhawan, who are in its custody.
The court said it was aware that several depositors had been left in the lurch, but added that it also couldn’t be said that many of the depositors were unaware of what was happening in the bank.
The RBI restrictions had earlier triggered protests by depositors and accountholders of the cooperative lender. “The RBI’s decision is irrational and arbitrary and is violative of the fundamental rights of the common public. There was no prior intimation given by the RBI,” one of the petitions said.
It said the directives had caused anguish and suffering to people whose hard-earned money was locked in the bank.