RBI allows finance bank to take over PMC Bank

The Reserve Bank of India (RBI) Monday told the Delhi High Court that it has given in-principle approval for setting up a small finance bank which will take over the scam-hit PMC Bank soon.

A bench of Justices D N Patel and Justice Jyoti Singh granted time to the RBI to file an affidavit on the development in the matter and listed the case for further hearing on August 20.

Senior advocate Jayant Bhushan, representing the RBI, submitted that it has given in-principle approval to Centrum Finance Services Ltd to set up a small finance bank which will take over Punjab and Maharashtra Cooperative (PMC) Bank very soon as the process in near completion.

He said this will ease the trouble faced by the bank's customers who are unable to withdraw their money.

The court was hearing an application by consumer rights activist Bejon Kumar Misra seeking directions to the RBI to consider other needs of PMC Bank depositors such as education, weddings and dire financial position, not just serious medical emergencies as being done at present.

The application was filed in Misra's main PIL seeking directions to the RBI to ease the moratorium on withdrawals from the PMC Bank during the coronavirus pandemic.

Advocate Shashank Deo Sudhi, representing Misra, submitted that more than five dates have been given to the authorities and the hard earned money of the depositors has not been released.

At least senior citizens be allowed to withdraw their money up to Rs 5 lakh as they are suffering from hardship and the depositors are unable to withdraw their own money.

The high court had earlier said that according to the Supreme Court's decision on withdrawal of money by depositors of PMC bank for exigencies, exceptions can be carved out for urgent medical and educational requirements.

The court had asked the depositors, whose needs have been highlighted before the court in a PIL, to once again approach the RBIappointed administrator of PMC bank giving details of their financial needs along for medical or educational reasons within three weeks.

RBI had earlier argued that while it sympathises with the plight of the depositors, everyone would have some or the other financial emergency; and if Rs 5 lakh was released to all, as provided in case of medical emergencies, the bank would be in difficulty and depositors would not get their entire deposits back.

RBI had said it was trying to keep the bank functioning in the interests of the depositors and had floated an expression of interest for investing in it and has received some bids.

The PMC Bank has been put under restrictions, including limiting withdrawals, by the RBI, following the unearthing of a Rs 4,355-crore scam.