Depositors can approach RBI admin for emergency withdrawals: HC told

Mumbai: Depositors of the crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank can approach the Reserve Bank-appointed administrator for withdrawal up to Rs 1 lakh in case of medical emergencies, the RBI told the Bombay High Court on Tuesday.

In an affidavit filed in the HC in response to petitions challenging the fund withdrawal restrictions, the RBI has mentioned the withdrawal ceiling at Rs 50,000 for scenarios like marriage, education, livelihood and "other hardships".

RBI counsel Venkatesh Dhond told a division bench of Justices S C Dharmadhikari and R I Chagla that the depositors facing hardships can approach the RBI-appointed administrator and seek withdrawal up to Rs one lakh. Such withdrawal restrictions were necessary to safeguard the interests of the bank and its depositors, the affidavit stated. The apex bank also stated that a largescale wrongdoing has been found in the PMC bank. On September 23, the RBI had imposed regulatory restrictions on the PMC Bank for six months over alleged financial irregularities.

"To mitigate the hardship of the depositors, the RBI has enabled entertaining on merit any application for withdrawal beyond the stipulated amount on hardship grounds like medical treatment, marriage, education, livelihood and other hardships, subject to a ceiling of Rs one lakh on medical ground and Rs 50,000 in all other cases," the affidavit stated.

The bench after perusing the affidavit posted the petitions for further hearing on December 4.

The withdrawal limit for account holders was initially Rs 1,000 per each customer for six months, which was later raised to Rs 10,000 and is now presently at Rs 50,000. The crisis at the bank is attributed to the loans allocated to realty firm the Housing Development Infrastructure Ltd (HDIL) without scrutiny. These loans later turned into non-performing assets (NPAs).

The petitions were filed by persons claiming to be depositors and account-holders of the bank seeking withdrawal of restrictions imposed by the RBI.

Meanwhile, the Reserve Bank informed the Bombay High Court on Tuesday that senior officials of PMC Bank used special codes to hide hundreds of dummy loan accounts of HDIL, to which the bank had over 73 per cent of its loan exposure. In an affidavit, the RBI also said of the 1,800 employees of Punjab & Maharashtra Cooperative (PMC) Bank, only about 25 of them could access the loans accounts of the now bankrupt real estate developer HDIL and its group entities.

The regulator said these few employees used an access code to hide and restrict the visibility of these dummy accounts of the realty developer. The Reserve Bank is closely monitoring the situation at the bank and a forensic audit is underway, governor Shaktikanta Das had said earlier amid persisting uncertainty over depositors' funds.

"Senior officials of the PMC Bank had assigned certain specific access codes to the accounts belonging to HDIL and its group entities which were used for assigning restricted visibility," the RBI affidavit said.

"Less than 25 of the 1,800 staff of the bank, could access these loan accounts. As a result, all the stressed HDIL group accounts were omitted from the system," it added.

The arrested promoters of HDIL allegedly siphoned funds from PMC Bank by using overdraft facilities and the money was "disguised" as loan accounts by bank officials, the Economic Offences Wing of the Mumbai Police had said earlier.

The RBI further said the undisclosed loan accounts to the HDIL group were sanctioned and renewed with approval of the bank's now-suspended managing director Joy Thomas, who is behind the bars now along with the bank chairman Wayram Singh.

"These loan sanctions are not recorded in the minutes of loans committee, recovery committee and so on," the affidavit said.

"PMC Bank submitted fraudulently manipulated data to the RBI for sample checks and the sample of accounts picked for inspection did not contain the undisclosed HDIL related accounts," it said.