The Reserve Bank of India (RBI) on Tuesday told the Delhi High Court that restrictions imposed on withdrawal limits on Punjab and Maharashtra Cooperative (PMC) Bank customers is based on the bank's liquidity position and ability to pay its depositors.
The RBI, in its affidavit, told the court that direction regarding restrictions on withdrawal limits of deposits and to stop indiscriminate lending in the interregnum and to restrict payment of deposits was based on available liquidity to prevent any discretionary and discriminatory payment to the small body of depositors.
Central bank's response came on a petition filed by Bijon Kumar Mishra, who has challenged withdrawal limits in PMC Bank.
RBI also told the court that all concerned authorities are working in close co-ordination for speedier resolution of this crisis and therefore no intervention from this court is desired at this juncture.
The RBI said it has taken all possible steps to protect the interest of the depositors and has initiated against whosoever responsible for the present financial crisis.
"The steps taken by RBI are not arbitrarily in nature. Directions under Section 35A of the Banking Regulation Act 1949 (AACS) were issued in view of the large scale irregularities and wrongdoings committed by the bank to prevent further detention of the bank's financials and also aim at protecting the interest of depositors," the RBI said in its reply.
RBI also told the court that Bombay High Court had dismissed a similar plea. It said that the petition is devoid of merits and as such deserves to be dismissed with exemplary costs.
"The petition is totally misconceived. RBI has not violated any fundamental, legal or statutory rights of the petitioners for invoking Article 226 of the Constitution of India against RBI and as such the present petition was filed against the answering respondent (RBI) is not maintainable under Section226 of the Constitution of India." Mishra, in his petition, filed the petition through advocate Shashank Dev Sudhi has also sought a direction to ensure the money of victim depositors lies safe in the bank.
The petitioner also sought directions to all respondents seeking complete insulation and insurance of the hard-earned deposited money of the common people in various co-operative banks including nationalized banks by enacting of an appropriate measure in nature of 100 per cent insurance coverage towards their "hard-earned" deposited amount.
In his plea, Mishra sought directions from the court to constitute a high-powered committee to look into working and operation of all co-operative banks in order to have a robust and transparent mechsm which can inspire the confidence of the common people in co-operative banks.
In September last year, the RBI restricted the activities of the PMC Bank for six months and asked it not to grant or renew any loans and advances, make any investment or incur any liability, including borrowing of funds and acceptance of fresh deposits after an alleged fraud of Rs 4,355 crore came to light.
The central bank had initially capped the deposit withdrawal at Rs 10,000 but later raised it to Rs 40,000. The Enforcement Directorate (ED) has seized and identified movable and immovable assets worth more than Rs 3,830 crore owned by HDIL in connection with the case.
( With inputs from ANI )