The Supreme Court has asked the RBI and administrator of scam-hit PMC Bank to work out ways to relax limits on withdrawals by depositors in genuine cases of medical emergency and for education.
A bench led by Justice DY Chandrachud said that a genuine depositor should not be made to suffer in exigencies and that restrictions should give way to the bonafide needs after proper verification and in terms with the laid down norms.
“The Administrator may devise appropriate modalities within the terms of the existing directives, as applicable, to ensure that genuine cases of hardship on medical and educational grounds are duly attended to,” ordered the bench on Friday.
Senior advocate Kailash Vasdev had submitted that among the depositors who he represents are those who are suffering from serious medical conditions such as cancer. He argued that even if the bench was not inclined to completely do away with these restriction on withdrawals, there should be some redressal for those facing serious medical emergencies or genuine requirements for education.
The court accepted this suggestion and said: “In the event that any genuine depositor has a grievance in regard to a disbursement for the purpose of attending to urgent medical or educational requirements, we will leave it open to the depositor to move a representation to the competent authority in the Reserve Bank of India and/or the Administrator appointed by the Reserve Bank of India.”
It added that the RBI and the administrator should then ensure that such depositors are not left to fend for themselves and that their requirements are attended to in accordance with the existing regulations.
The bench, which was dealing with a clutch of pleas by the petitioners, however refused to quash the orders issued by the RBI to limit the withdrawals by the PMC Bank depositors.
It found favour with the steps taken by the RBI, and added that such restrictions on withdrawals were placed in the interest of the depositors only.
“These restrictions have been put in place with reasons. They aim at protecting genuine depositors' interests. We cannot substitute our wisdom here,” observed the bench while turning down the plea to remove the ceilings on withdrawals.
In these appeals against the order of the Bombay High Court in December 2019, the petitioners had said that the RBI must be directed to make sufficient funds available for easy and unhindered withdrawal of the deposits of the depositors and, particularly, to be utilised for their day-to-day expenses, health and educational needs and business requirements.
It added that the required degree of vigilance was not maintained by the RBI. “Rather, RBI was negligent in not ensuring a discipline and order in the functioning of the bank,” argued Gonsalves.
But the bench was not convinced. It referred to the detailed order passed by the Bombay High Court in the bunch of petitions, and agreed with the views taken therein that the blame cannot squarely lie with the RBI.
Justice Chandrachud pointed out from the high court order that while there was nothing on record to substantiate this accusation against the banking regulator, the affidavit by the RBI had emphasised on ascertaining ways to bring some normalcy and bring some form of discipline in the bank.
Further, the RBI had maintained that the restrictions were put in place also to ensure that those close to the management of the bank and in cahoots do not get undue access in withdrawing their money while others are left in the lurch.
“The High Court has furnished cogent reasons for not interfering with the directive of the Reserve Bank of India under Section 35A of the Banking Regulation Act 1949. We are not inclined to interfere with the carefully reasoned judgment of the High Court. We decline to entertain the Special Leave Petitions under Article 136 of the Constitution,” ordered the bench.
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