PMC depositors allowed to withdraw up to Rs 5 lakh for Covid treatment: RBI

RBI filed a response in Delhi HC, stated that depositors of PMC Bank are already allowed to withdraw up to Rs 5 lakhs on hardship grounds for treatment of terminal illnesses, including Covid treatment

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The Reserve Bank of India (RBI) in a response filed in Delhi High Court stated that depositors Punjab Maharashtra Cooperative (PMC) Bank are already allowed to withdraw up to Rs 5 lakhs on hardship grounds for treatment of terminal illnesses, including treatment of COVID-19.

"It is the duty of Punjab Maharashtra Cooperative (PMC) to pay hardship amount to the eligible depositors as per directions of RBI and subject to availability of liquidity with that bank. To expedite the process, the authority for approving the payment under hardship grounds has also been delegated to the PMC Bank," states RBI reply in Delhi High Court.

RBI affidavit has been filed in court in a response to an application seeking immediate release for emergency funds to meet the financial needs arising out of sudden out-break of the second wave of COVID-19.

A bench of Justice DN Patel and Justice Jasmeet Singh had recently sought response from all the respondents including RBI and had asked the RBI to be sympathetic to the depositors. The matter was listed for hearing on May 13 but got adjourned for June 4, as the Bench concerned did not assemble today.

The interim application was filed in the pending petition filed by Bejon Kumar Mishra, challenging withdrawal limits in Punjab and Maharashtra Cooperative (PMC) Bank.

Advocate Shashank Deo Sudhi, who appeared for the petitioner submits that the common depositors are condemned to lead humiliated life without any money at the time when the depositors are in the need of money. It is further submitted that it has passed more than one year and the interim order cannot be continued for an indefinite period of time especially during the out-break of Covid-19. It is also submitted that the second wave of the pandemic is posing a huge challenge to the depositors of PMC on account of increased prices for the treatment in hospitals and the cost of essential medicines.

The RBI affidavit also submitted that the financial condition of PMC Bank continues to be precarious, with its liquidity position not improving enough to allow much room for enhancement of withdrawal limit. Further, the bank also needs to maintain bare minimum liquidity to run as a going concern and to make itself viable for prospective investors for takeover/merger. Then the reconstruction of the bank will be feasible, which will be in the interest of a larger body of depositors.

Earlier, Delhi High Court had directed the Reserve Bank of India, Punjab Maharashtra Cooperative Bank and other respondents to consider the needs of the depositors during the coronavirus-induced lockdown. The RBI had capped the deposit withdrawal limit at Rs 40,000 and restricted the activities of the PMC Bank after an alleged fraud of Rs 4,355 crore came to light. The Enforcement Directorate has seized and identified movable and immovable assets worth more than Rs 3,830 crore owned by HDIL in connection with the case.