Under the existing law, deposits only up to Rs1,00,000 in an account are insured
On 23 September, RBI barred PMC from carrying out any operations for the next six months
NEW DELHI :
The Delhi High court on Friday issued notice to Central Government, Delhi government and Reserve Bank of India (RBI) among others in a public interest litigation (PIL) that seeks for an interim protection of victim depositors of Punjab & Maharashtra Co-operative (PMC) bank branches of National Capital Territory (NCT) of Delhi. The next date of hearing is on 22 January.
The petition filed by Bejon Kumar Misra through advocate Shashank Deo Sudhi seeks for issuance of direction to regulate the banks to generate faith of depositors in banking. The petitioner seeks for complete insulation and insurance of the hard earned deposited money of the common people in various co-operative banks including nationalized banks.
Under the existing law, deposits only up to Rs1,00,000 in an account are insured. The insurance capping up to ₹100000/- against the any amount is arbitrary and violates the fundamental provision of the Constitution of India where the hard-earned deposited money of depositors is not secured to the extent to which their deposits are lying, the petitioner alleges.
It further seeks for issuance of an exhaustive and comprehensive guideline to safeguard the banking and co-operative deposits in the eventuality of emergency financial crisis where common people are unable to withdraw their money for no fault of theirs.
On 23 September, RBI barred PMC from carrying out any operations for the next six months. It had initially capped the deposit withdrawal at ₹1,000 per account which was relaxed to ₹10,000 in two days and then further increased to ₹25,000. The central bank's action came after it found certain irregularities in the bank, including under-reporting of non-performing assets (NPAs) and large deposit withdrawals.
The withdrawal limit was later increased to ₹40,000. Under Section 35A of the Banking Regulations Act, RBI can issue directions to banks to “prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or to secure the proper management of any banking company generally".