Investors given time till Feb 1 to submit final bids for PMC Bank

Potential investors in the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank have been allowed time till February 1, 2021 for submission of their final offer.

The potential investors include the Centrum Group-BharatPe combine and the UK-based Liberty Group. These investors had submitted their Expression of Interest (EoI) last month.

The bank’s Administrator AK Dixit, in a letter to customers and stakeholders, said: “As you are aware, the bank had issued EoI on November 3, 2020, inviting investors for revival/ reconstruction of PMC Bank.

Also read: RBI extends restrictions on PMC Bank to March

“Initially, four investors had shown their interest. Further process has been undertaken by three of them.”

The Administrator observed that the investors need to have a full understanding of the financial position of the bank before giving their final offer. Accordingly, they are at various stages of conducting detailed due diligence.

PMC Bank was placed under Directions by the Reserve Bank of India (RBI) with effect from the close of business on September 23, 2019 due to its poor financial position and negative net worth.

The Directions were necessitated as RBI came across a nexus between borrowers (promoters of a real estate group) and some bank officials, with the alleged fraud/ financial irregularities pegged at about ₹4,355 crore.

The EoI was floated to identify a suitable equity investor/ group of investors willing to take over management control so as to revive PMC Bank and commence regular day-to-day operations.

As per the EoI, subsequent to commencement of the normal day-to-day operations, it will be open for the investor(s) to convert the bank into a Small Finance Bank by making an application to RBI.

“The investor(s) should ideally bring in the capital required for enabling the bank to achieve the minimum required capital to risk weighted assets ratio (CRAR) of 9 per cent.

“However, the investors may explore the option of restructuring a part of deposit liabilities into capital/capital instruments,” the EoI said.

Also read: Road ahead for co-operative banks

The bank may also approach DICGC for its support for payment up to ₹5 lakh (insured deposits) to depositors under the provisions of the DICGC Act, 1961, it added.

According to the EoI, PMC Bank had total deposits of ₹10,727.12 crore, total advances of ₹4,472.78 crore and gross non-performing assets (NPAs) of ₹3,518.89 crore as on March 31, 2020.

Further, the share capital of the bank was ₹292.94 crore. However, the bank registered a net loss of ₹6,835 crore during 2019-20 and has a negative net worth of ₹5,850.61 crore, as per the EoI.