The Delhi High Court on Friday asked the Reserve Bank of India (RBI) to decide on a list of persons seeking withdrawal of their money, deposited in the scam-hit Punjab & Maharashtra Co-operative (PMC) Bank, for treatment of life-threatening ailments including COVID-19.
A Bench of Chief Justice D.N. Patel and Justice Prateek Jalan also asked petitioner Bejon Kumar Misra, who highlighted difficulties faced by depositors in withdrawal of their money, to prepare the list of depositors and submit it to the banking regulator.
The High Court also clarified that the ceiling of withdrawal on hardship grounds, which includes treatment of cancer and other ailments concerning the heart, kidney, liver etc., will not be beyond ₹5 lakh.
The court’s direction came after advocate Shashank Deo Sudhi, appearing for Mr. Misra, contended that many of the depositors had written several times to the RBI seeking withdrawal under the hardship guidelines but their requests have been denied.
The RBI has imposed restrictions on the operations of scam-hit PMC Bank, including curbs on withdrawals, after an alleged fraud of ₹4,355 crore came to light. Preliminary enquiries have revealed that the PMC Bank issued over 70% of its total loans to Housing Development Infrastructure Limited.
The RBI said it was not possible to raise the present withdrawal limit, reviewed on June 19, 2020, of ₹1 lakh due to lack of liquidity. This enhanced withdrawal limit of ₹1 lakh will allow more than 84% of the depositors to withdraw their entire account balance, the central bank said.
In an affidavit, the RBI stated that PMC Bank’s reported financial position as on March 31, 2020 (unaudited) continues to be “precarious”. It said that against the total deposit liability of approx ₹10,000 crore as on March 26, 2020, liquid assets available with the PMC bank were to the tune of ₹2,955 crore.
This, the RBI said, was “grossly insufficient to fully pay all its depositors considering the position that approx 78% of the advances (where 56.33% of its deposits were deployed) are non-performing and therefore cash flows are severely constrained”.
“PMC has reportedly taken steps like initiating action for recovery under the SARFAESI Act, proceedings under NCLT, etc..., recovery is slow owing to legal hurdles being faced by the bank,” the banking regulator said, adding that the COVID-induced lockdown has also adversely affected auction/ recovery processes.
It added that the PMC Bank is working in close coordination with law enforcement authorities to recover dues from person/ entities responsible for financial fraud in the bank, which led to the bank's present state of affairs.
The RBI said there cannot be any parallels drawn between PMC Bank and restructuring of another scam-hit bank, Yes Bank, as for the former, no bank or investor have so far shown any interest.