Make banking regulation law applicable to cooperative banks, says PIL in HC
A PIL has been moved in the Delhi High Court seeking directions to the Centre and the Reserve Bank of India to make the Banking Regulation Act (BRA) applicable to cooperative banks on par with public sector and private banks.
A bench of Chief Justice D N Patel and Justice C Hari Shankar on November 13 listed the petition, filed by a society, for hearing on January 24.
The plea referred to the scam-hit Punjab and Maharashtra Cooperative (PMC) Bank Ltd and sought directions to the central government and the Reserve Bank of India (RBI) to amend the BRA to make it applicable on such financial institutions.
It has also urged the court to issue directions making the Depositor Insurance and Credit Guarantee Corporation (DICGC), a subsidiary of RBI, liable to pay depositors 100 per cent of the amount they have deposited in crisis-hit banks like PMC.
DICGC has been set up to provide insurance of deposits and guarantee credit facilities.
The Society for Development and Justice, in its plea, has also sought directions making RBI accountable for any loss incurred by depositors on account of mismanagement of funds by any bank.
Apart from that, it has also sought setting up of a high powered SIT comprising of financial experts or economists and headed by a retired Supreme Court judge to look into the “real causes” of “continuing failure of rural and urban cooperative banks”.
Earlier this month, the high court had sought responses from the Centre, the Delhi government and RBI on a PIL seeking removal of restrictions on cash withdrawals from PMC Bank.
The plea, by consumer rights activist Bejon Kumar Misra, has also sought a 100-per cent insurance cover for customers’ money deposited in the bank.
The PMC Bank has been put under restrictions by the RBI, following the unearthing of a Rs 4,355-crore scam.
Cash withdrawals from the bank were recently hiked to Rs 50,000 by the RBI. It was earlier capped at Rs 40,000.
The other petition has sought quashing of the RBI notifications by which the restrictions were placed on cash withdrawals from the bank.
Misra’s petition has also sought directions to the Centre and the RBI for constituting a high-powered committee to look into the working and operations of all cooperative banks “in order to have a robust and transparent mechanism, which can inspire confidence of the public in cooperative banks”.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.