HC issues notice to Centre, RBI on PMC Bank scam

The Delhi High Court on Friday issued notice to the Centre, RBI and the Delhi government on a plea for removing restriction on withdrawal of cash from scam-hit Punjab & Maharashtra Cooperative Bank.

A bench of Chief Justice D N Patel and C Hari Shankar sought response from the Finance Ministry and the banking regulartor RBI and the government of National Capital Territory on the PIL seeking a direction for giving 100 % insurance to the depositors in cooperative banks.

The PIL filed by consumer rights activist Bejon Kumar Mishra also urged the court to lay down comprehensive guidelines to safeguard interests of the depositors in case of a financial crisis created by unscrupulous elements.

The PMC Bank has been put under restrictions by the Reserve Bank of India (RBI) following the discovery of a Rs 4,355-crore scam.

Deposit withdrawals, which were initially capped at Rs 1000 by the RBI after invoking Section 35A of the Banking Regulation Act, have been raised to Rs 40,000 over a six-month period, causing panic and distress among depositors.

The petitioner alleged that the Centre and the RBI failed to take steps to protect hard-earned money of 15 lakh customers of PMC Bank. He sought a declaration that the notifications issued by the RBI were ultra vires Article 14 and 21 of the Constitution.