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The extension of directions on scam-hit Punjab and Maharashtra Co-operative (PMC) Bank by six months has dampened the spirits of depositors.
Depositors say the delay in accessing their money amid the pandemic is causing a lot of anxiety.
This is despite the fact that the Reserve Bank of India (RBI) has given in-principle approval, valid for 120 days, to Centrum Financial Services Ltd (CFSL) to set up a small finance bank (SFB), which, in turn, will rescue PMC Bank by acquiring it.
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RBI takes this decision, factoring in the the time needed to complete the process involved in rescuing the bankChander Purswani, President, PMC Depositors Forum, said: “Extension of the directions by another six months (till December-end) without any money for the depositors is very insensitive.
“This is not acceptable. How do they (RBI) expect the depositors survive for the next six months? We need an answer to this question.”
Deposit withdrawals are capped at ₹1 lakh per depositor for the entire duration that PMC Bank is under directions.
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PMC Bank’s rescue plan did have its own dilemma
CFSL made the cut as it was the only player with experience in financial services spaceThe bank has been under directions for the past 21 months. Depositors, especially senior citizens, who depend on deposit income for meeting monthly expenses, are finding it difficult to survive.
Immediate succour
Purswani felt that the RBI should have at least provided immediate succour to the retail depositors, currently holding balances over ₹1 lakh, to withdraw up to the deposit insurance amount of ₹5 lakh.
Omprakash Teckchandani, a PMC Bank depositor, said: “The uncertainty as to what is going to happen to our deposits is killing us. Now that the RBI has found suitors to rescue the bank, it should be able to tell us how the money will be paid back to us.
“Some of the depositors are in a mess, not able to meet necessary expenses of life.”
Referring to the pitiful state of some depositors, who have crores of rupees saved in PMC Bank, Teckchandani said they are eating langar food at Gurdwaras, and seeking monetary help from kith and kin.
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Hope arises from the proposed amalgamation of the scam-hit bank with a small finance bankThe central bank, in a statement on June 25, said certain proposals were received in response to the Expression of Interest (EOI) floated in November 2020 by PMC Bank for its reconstruction. “After careful consideration, the proposal from Centrum Financial Services Ltd. (CFSL), along with Resilient Innovation Pvt Ltd (BharatPe), has been found to be prima facie feasible.
“Accordingly, in specific pursuance to their offer dated February 1, in response to the EOI, the RBI has, on June 18, granted in-principle approval, valid for 120 days, to CFSL to set up a small finance bank (SFB)…,” the RBI said in a statement.
Merger
Once the SFB is floated, PMC Bank would be merged with it.
Jaspal Bindra, Executive Chairman, Centrum Group, said that CFSL and BharatPe, equal partners in the proposed SFB, will together commit ₹900 crore to their joint venture in the first year.
As and when required, the partners will commit ₹900 crore more. The minimum paid-up net worth requirement for starting an SFB is only ₹200 crore.
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