Finance Minister Nirmala Sitharaman on Monday informed the Lok Sabha that the process of getting money back to small depositors after writing off bank loans is a layered and time-consuming process, citing the Punjab and Maharashtra Co-operative (PMC) Bank case. , where depositors are challenging the Delhi High Court over restrictions imposed on their withdrawals.
FM was responding to a question raised by Nationalist Congress Party (NCP) MP Supriya Sule on the process of recovering money from their banks by small depositors who are facing difficulties with reference to the PMC Bank case. The Delhi High Court earlier this month dismissed a plea by depositors of PMC Bank challenging restrictions imposed by the Reserve Bank of India (RBI) on withdrawals from their bank accounts.
FM Sitharaman responded to Sule, “The processes are very layered and take a long time. There are times when there are even sets of defaulters. Even if the property of these defaulters is attached, it requires a very complicated process through the courts.” Citing the example of PMC Bank, the FM said, “If we go to court and ask them to release some of what was attached by the agencies that went to enforce it. The courts would not allow you to sever that part for giving relief to bank depositors.”
“Your intentions may be good, but the process is so long that investors and depositors do not get their money back. So who is really benefiting from this write-off?” Sule asked, asking the Union Finance Minister to shorten the process. To this, Sitharaman said, “I agree with the MP, the processes are so layered that by the time justice is sought, many small depositors will find themselves in extreme trouble. There is definitely a need to look at how we can simplify the process without denying justice.”
Sule’s question came as a follow-up question to Congress MP Deepak Baij, who questioned the government on recovering funds after writing off bank loans. On Tuesday (December 13), Sitharam informed the Rajya Sabha that banks have written off bad loans to the tune of ₹10,09,511 crore during the last five financial years. Because the borrowers of the written-off loans are still responsible for repayment and the debt collection process from the borrower on the written-off loan accounts continues, the write-off is not beneficial to the borrower, she said.
The petitioners, who collectively held fixed deposits of over ₹90 lakh in PMC Bank, alleged that the RBI’s action was arbitrary and deprived innocent depositors of access to their own savings. Dismissing the petition, Justice Prateek Jalan, while sympathizing with the petitioners, observed that he was unable to grant them relief. In the case of PMC Bank, the court noted that PMC Bank was restricted for the first time in 2019 from releasing an amount above ₹1,000 from the total balance in each savings account, current account or deposit account. This amount was increased to ₹40,000 after looking into the financial position of the bank, which was said to have deteriorated considerably due to frauds perpetrated on it by certain persons.
