RBI approves merger plan for Punjab and Maharashtra Co-op Bank
New Delhi, January 25
The Reserve Bank of India (RBI) has decided to merge the fraud-hit Punjab and Maharashtra Co-operative (PMC) Bank with a small finance bank called Unity Small Finance Bank Limited promoted by Centrum Financial Services along with Resilient Innovations.
Due to fraud by Housing Development and Infrastructure Limited and its group companies, there was complete erosion of capital and substantial deposit erosion of PMC, leading to RBI freezing its operations in order to protect the interest of the depositors and to ensure that the bank‘s available resources are not misused or diverted.
Centrum Financial and Resilient Innovation had expressed interest in February 2021 for acquiring PMC Bank through an amalgamation scheme with a new small finance bank. Accordingly, after acquiring licence from RBI, Unity Small Finance Bank Limited began transacting business from November 1, 2021. The promoters have infused capital of over Rs 1,100 crore in Unity Small Finance Bank. Equity warrants of Rs 1,900 crore, to be exercised anytime within eight years, have been issued by the Bank to the promoters to bring more capital.
The Deposit Guarantee Corporation will pay Rs 5 lakh over five years and afterwards simple interest of 2.75 per cent annually will be paid on amounts still remaining outstanding. Rs 50,000 each will be paid in the first two years, Rs 1 lakh in the third year, Rs 2.50 lakh in the fourth year and Rs 50,000 in the fifth year. No interest on any of the interest bearing deposits with the transferor bank will accrue after March 31, 2021.
