Crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank's takeover by the Unity Small Finance Bank (USFBL) came into effect on Tuesday, with the government notifying the scheme of amalgamation.
PMC Bank branches will operate as USFBL branches from Tuesday onwards, the Reserve Bank of India (RBI) said in a statement on Tuesday.
The takeover comes into force little over two years after the RBI superseded the board of the PMC Bank after financial irregularities came to light.
On Tuesday, the government sanctioned and notified the scheme of amalgamation envisaging takeover of the assets and liabilities of PMC Bank, including deposits, by the USFBL.
"The amalgamation will come into force with effect from the date of the notification of the scheme i.e. January 25, 2022.
"All the branches of the PMC Bank will function as branches of Unity Small Finance Bank Ltd with effect from this date," the RBI said.
USFBL is making necessary arrangements to implement the provisions of the scheme, it added.
A draft scheme of amalgamation, prepared by the RBI, was placed in the public domain on November 22, 2021 whereby suggestions and objections, if any, were sought from members, depositors and other creditors of the two lenders.
The deadline for submission of suggestions and objections ended on December 10, 2021.
USFB, promoted by Centrum Financial Services along with Resilient Innovation Pvt Ltd as a 'joint investor', was granted a banking licence in October 2021.
USFB started functioning on November 1.
In September 2019, the RBI superseded the then board of PMC Bank and placed it under regulatory restrictions, including cap on withdrawals by its customers, after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL. The restrictions were extended several time since then.
PMC Bank's exposure to HDIL was over Rs 6,500 crore or 73 per cent of its total loan book size of Rs 8,880 crore as of September 19, 2019.
Photograph: Francis Mascarenhas/Reuters