HC raps central bank over PMC withdrawals

The Delhi High Court pulled up the Reserve Bank of India (RBI) for leaving it to scam-hit PMC Bank to decide which emergencies cited by its depositors were to be considered for disbursal of Rs. 5 lakh to them, saying since the central bank imposed the restrictions, it should have been the one taking the decision.

Punjab and Maharashtra Cooperative Bank has been put under restrictions, including limiting withdrawals, by the RBI, following the unearthing of a Rs. 4,355-crore scam.

“RBI was to apply its mind and not act as a post office. If you (RBI) have imposed the restrictions, then you have to apply your mind. You cannot accept what PMC Bank says as gospel truth. You cannot leave it to PMC Bank to decide to whom it will disburse funds,” said a bench of Chief Justice D.N. Patel and Justice PrateekJalan.

“This is not satisfactory. You cannot leave it to PMC Bank to decide. There has to be some way to monitor it, something independent of the administrator (appointed by RBI),” the bench added.

The court was hearing an application by consumer rights activist Bejon Kumar Misra seeking directions to the central bank to consider other needs of PMC Bank depositors for withdrawal, such as education, wedding and dire financial position, not just serious medical emergencies.

The bench also told RBI that there should be a grievance redressal mechanism in place to address the grievances of depositors who are not satisfied by the decision taken by PMC Bank or the administrator.