A petition was filed in the Supreme Court on Thursday challenging the RBI circulars restricting the withdrawal of money from co-operative banks.
The plea challenged section 35A of the Banking Regulation Act, 1949 and section 16(1) of the Deposit Insurance Credit Guarantee Corporation Act, 1961.
"Section 35A is being interpreted by RBI as including the right to restrict withdrawal of amounts from the accounts of the depositors in certain circumstances. It is the submission of the petitioner that the section must be read down to exclude the right of the Union of India or the RBI to restrict withdrawal of deposits," the plea filed by a Delhi resident Vivek Dixit stated.
Section 35A is a general section giving the RBI power to issue directions to the bank, the plea stated, adding that such a section cannot be interpreted as a power of the RBI to restrict withdrawal of deposits of depositors. "A specific law would be needed for that purpose and such a law does not exist," it added.
The plea sought a declaration that all depositors in public sector banks and multi-state urban cooperative cannot have the withdrawal of their deposits in the banks restricted in any manner by the RBI or by any other authority.
It further sought a declaration that in the event that a bank does not have sufficient assets to allow for the withdrawal of deposits then the Centre is duty-bound to financially back up the banks by infusion of capital.
The plea also challenged the circular of the RBI October 14 restricting the withdrawal of deposits to Rs 40,000 only.
"No law can be made taking away the life savings of members of the public," it added.
( With inputs from ANI )