Money & Banking

Merger of PMC-MSC Bank may remain a non-starter

Our Bureau Mumbai | Updated on December 14, 2019

A file photo of the Punjab and Maharashtra Cooperative Bank branch in Mumbai   -  PAUL NORONHA

Registrations of respective banks are different

The proposal to merge the fraud-hit Punjab and Maharashtra Co-operative (PMC) Bank with the Maharashtra State Co-operative (MSC) Bank, as suggested by Maharashtra cabinet minister Jayant Patil recently, may remain just that as their registrations are different -- while the former is a multi-state co-operative bank, the operations of the latter are restricted to the State.

This merger suggestion from the minister has come even as MSC Bank is weighing other acquisition proposals. The State co-operative bank is considering acquiring two weak district central co-operative banks (DCCB) — based in Wardha and Nagpur, and two urban co-operative banks — Mumbai-based City Co-operative Bank and Pune-based Rupee Co-operative Bank, which are currently under Reserve Bank of India directions, for quiet some time now, say sources in the co-operative banking sector.

PMC Bank has 137 branches across Maharashtra, Karnataka, Delhi, Goa, Gujarat and Madhya Pradesh.

MSC Bank, which is at the apex of the three-tier co-operative credit structure in the State, has 49 branches in Maharashtra. At the middle of the three-tier co-operative credit structure structure are 31 district central co-operative banks (DCCBs) and at the bottom level are over 21,200 primary agricultural credit societies (PACS).

Bankers’ say if at all the merger has to be pursued then PMC Bank would have to give up its multi-State licence, thereby becoming a bank with operations only in Maharashtra. This will entail closure of 34 branches spread across five States.

However, they caution that such a merger could prove deleterious for MSC Bank’s financial health. Hence, the National Bank for Agriculture and Rural Development and the RBI may not be agreeable to this.

PMC Bank was placed under RBI directions with effect from the close of business on September 23, 2019.

According to the RBI, the bank’s financial position has been substantially impaired due to fraud perpetrated on it by certain persons. The bank is being managed by RBI-appointed Administrator. Currently, the bank’s depositors can withdraw up to ₹50,000 of the total balance in their accounts.

Published on December 13, 2019

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