Paving the way for takeover of crisis-ridden Punjab and Maharashtra Cooperative Bank (PMC), the Reserve Bank of India on Friday granted in-principle approval to the Centrum Financial Services to set up a small finance bank. Centrum Financial Services was one of the applicants for takeover of the PMC Bank. "This 'in-principle' approval has been accorded in specific pursuance to the Centrum Financial Services Limited's offer dated February 1, 2021, in response to the expression of interest notification (November 3, 2020) published by the PMC Bank Ltd," the RBI said in a statement.
The Reserve Bank on Friday extended the regulatory restrictions on Punjab and Maharashtra Cooperative (PMC) Bank by another six months till December 2021 to enable the completion of its takeover by Centrum Financial Services. Paving the way for takeover of the crisis-ridden bank, the RBI had earlier in the month granted in-principle approval to Centrum Financial Services to set up a small finance bank (SFB). "Taking into account the time required for completion of various activities involved in the process...the validity of the ...Directive dated September 23, 2019, as modified from time to time, has been extended for a further period from July 1, 2021 to December 31, 2021, subject to review," the RBI said in a notification.
The restrictions on Punjab and Maharashtra Cooperative (PMC) Bank has been extended for another three months till the end of March next year. Reserve Bank of India (RBI) has extended the restrictions as further action on the draft scheme for the takeover of the crisis-hit bank by the Delhi-based Unity Small Finance Bank (USFB) is in process. The central bank had prepared a draft scheme of amalgamation and the same was placed in the public domain on November 22 as part of seeking suggestions and objections, if any, from members, depositors and other creditors of PMC Bank and USFB.
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 The takeover comes into force little over two years after the RBI superseded the board of the PMC Bank after financial irregularities came to light.
Only when we are part of the same family, which will happen down the line, then, of course, we will give them (PMC depositors) all the assurance and the comfort.'
Inching closer to resolving the Punjab and Maharashtra Cooperative (PMC) Bank issue, the Reserve Bank on Monday came out with a draft scheme for takeover of the crisis-hit bank by the Delhi-based Unity Small Finance Bank (USFB). The draft scheme of amalgamation envisages takeover of the assets and liabilities of PMC Bank, including deposits, by USFB, thus giving a greater degree of protection for the depositors, the RBI said. In September 2019, the RBI had superseded the 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.
Customers of stressed Punjab & Maharashtra Co-Operative Bank (PMC Bank) will not get up to Rs 5 lakh insurance cover in the first lot as the multi-state co-operative bank is under the resolution process. Deposit Insurance and Credit Guarantee Corporation (DICGC) in the first lot will pay customers of 20 stressed banks except PMC Bank. For the first lot, the mandatory 90 days period concludes on November 30.
'Banking is a business of trust.'
The draft amalgamation scheme of Punjab and Maharashtra Co-operative (PMC) Bank with Unity Small Finance Bank (SFB) allowed quick relief to depositors with savings of up to Rs 5 lakh, but a long wait for those who had their nest egg with the scam-tainted bank. If the scheme gets approved, 96 per cent (or 880,000 of 924,000) depositors will get their full money straightaway after PMC is merged with Unity SFB. According to the draft scheme, retail investors may get up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC) instantly, and then some more in phases till they can recall their full deposits after 10 years.
There will be different ways of returning the money, depending on the profile of the depositors and the amount, predicts Tamal Bandyopadhyay.
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