The Reserve Bank of India (RBI) on Friday told the Delhi High Court that to avoid delays in the process of withdrawals from scam-hit PMC Bank on hardship grounds, the authority for approving such requests was delegated to the bank.
The submission by the country's central bank was made in an affidavit filed in the high court in response to the court's observation that instead of leaving it to the PMC Bank to decide which emergencies cited by its depositors were to be considered for disbursal of Rs 5 lakh to them, the RBI should have been taking the call.
A bench of Chief Justice D N Patel and Justice Prateek Jalan had said that since the RBI has imposed withdrawal restrictions on the Punjab and Maharashtra Cooperative (PMC) Bank, the central bank should have been the one making the decision on allowing disbursals on hardship grounds.
"The Reserve Bank of India (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," the high court had said during a hearing on December 1 last year.
The PMC Bank has been put under restrictions, including limiting withdrawals, by the RBI, following the unearthing of a Rs 4,355-crore scam.
The observations came while hearing an application by consumer rights activist Bejon Kumar Misra seeking directions to the RBI to consider other needs of PMC Bank depositors such as education, weddings and dire financial position, not just serious medical emergencies as being done at present.
The application was filed through advocate Shashank Deo Sudhi in Misra's main PIL seeking directions to the RBI to ease the moratorium on withdrawals from the PMC Bank during the coronavirus pandemic.
In its affidavit filed pursuant to the December 1 hearing, the RBI has said that it had in January last year revised withdrawal guidelines on hardship grounds for all banks by permitting withdrawals up to a ceiling of Rs 5 lakh for treatment of critical life-threatening ailments.
"Further RBI has also clarified to the bank (PMC) that COVID-19 may be considered as critical life-threatening ailments and payments under the revised guidelines may be made in such cases," it has said.
It has also said that the PMC bank has invited expressions of interest (EoI) from eligible investors for investment or equity participation for its reconstruction and the last date for submission of EOI was December 15, 2020.
The PMC Bank has informed RBI that four proposals were received in response to the EoI and they were being examined with regard to their viability and feasibility which would take some time, the central bank has said in its affidavit.
The matter is expected to come up for hearing on January 4.
The court on May 28 had asked the Centre, the RBI and the PMC Bank to appreciate the difficulties faced by the depositors on withdrawals during COVID-19 pandemic.