In a setback for depositors, Supreme Court on Friday refused to entertain the plea of PMC bank account holders seeking lifting of restriction on cash withdrawals.
In a setback for depositors, Supreme Court on Friday refused to entertain the plea of Punjab & Maharashtra Co-operative (PMC) Bank account holders seeking lifting of restriction on cash withdrawals, news agency PTI reported. The apex court said that the account holders should seek relief from the relevant High Courts, the report added. The RBI has placed limits on withdrawal of savings after it found out financial irregularities in PMC Bank’s functioning, hiding, and classification of loans given to HDIL. The restrictions from the RBI came in after it found the bank’s exposure to real estate developer HDIL was in too much in excess of what the regulations require and also as the lender hid the NPAs of HDIL. PMC’s exposure to HDIL is around Rs 6,500 crore, which is 73 percent of its loan book of Rs 8,880 crore, as per the bank’s own admission.
Following this, the Economic Offences Wing arrested Rakesh and Sarang Wadhawan, the promoters of HDIL, along with the former chairman of the bank Waryam Singh in connection with frauds at the crisis hit bank. On October 14, 2019, the withdrawal limit at the troubled bank was increased by the RBI to Rs 40,000 from Rs 25,000.
“The Reserve Bank of India, after reviewing the bank’s liquidity position and its ability to pay its depositors has decided to further enhance the limit for withdrawal to ₹ 40,000/- (Rupees Forty Thousand only), inclusive of ₹ 25,000 allowed earlier. With the above relaxation, about 77% of the depositors of the bank will be able to withdraw their entire account balance,” RBI had then said in a statement.