New Delhi, Oct 17 : A petition was filed in the Supreme Court seeking quashing of the Reserve Bank of India circular which has restricted the withdrawal, to Rs 40,000 only, by account-holders of the scam-hit Punjab and Maharashtra Cooperative (PMC) Bank.
Last month, the RBI had imposed regulatory restrictions on PMC Bank under the provisions of the Banking Regulation Act. The RBI has initially allowed depositors to withdraw a paltry Rs 1,000, followed by Rs 25,000 and now raised to Rs 40,000, but the customers have been demanding full access to all their accounts.
The fresh petition, filed by Vivek Dixit through advocate Satya Mitra, has sought direction to quash Section 35A of the Banking Regulation Act, 1949 and section 16(1) of the Deposit Insurance Credit Guarantee Corporation Act, 1961. Under Section 35A, the RBI has given power to prevent the affairs of any banking company.
The petitioner submitted that Section 35A is being interpreted by the RBI as including the right to restrict withdrawal of amounts from the accounts of the depositors in certain circumstances. “Section 35A is a general section giving the RBI power to issue directions to the bank in respect of proper management. Such a section cannot be interpreted as including the 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,” the petition said.
Dixit also added that no law can be made taking away the life savings of members of the public.
“Members of the public have a legitimate expectation that public sector banks and cooperative societies would be backed up by UoI (Union of India). They have a legitimate expectation that UoI would by investing capital from its own resources to ensure, notwithstanding the so-called ill-health of the bank, that all the depositors can take back their monies,” the plea said.
In his plea, Dixit also told the court that his 75-year-old mother has filed a petition in the Delhi High Court seeking immediate relief to withdraw money to meet medical expenses for Dixit’s 80-year-old father, who is bed-ridden. His mother was refused permission to withdraw money from the bank.
He also told the court that in pursuant to the Delhi High Court order dated October 17, his mother was permitted to withdraw Rs 40,000 as the bank conceded that the limit for withdrawal had been raised to Rs 40,000 vide RBI letter dated October 14.
“Section 35A of the Banking Regulation Act, 1949 and section 16(1) Deposit Insurance Credit Guarantee Corporation Act, 1961 and the RBI circular dated October 14 are unconstitutional and deserves to be quashed. In the alternative section 35A of the Banking Regulation Act, 1949 ought to be read down to exclude the right of RBI or the Union of India the putting of any kind of restriction on the withdrawal of deposits,” the petitioner said.