Harried depositors of the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank may be allowed to withdraw deposits in a phased manner, spread over 4-5 years, if it gets revived by an equity investor/ group of investors.

Such a move will assure the investor of a relatively stable liability base (deposits) even as the new management goes about mobilising fresh deposits, in all probability under a new brand name, according to sources aware of the modalities of the revival plan.

While the principal withdrawal could be in tranches of either 20 per cent of outstanding deposit each year over the next five years or 25 per cent over the next four years, existing depositors are likely to be allowed unfettered access to the accrued interest.

“If depositors can withdraw the interest on deposits, they can get on with their lives.

“Senior citizens, who depended on interest income on deposits to meet monthly expenses, have faced untold misery ever since the Bank was put under RBI Directions in September 2019,” said a depositor.

Currently, deposit withdrawals are capped at ₹ 1 lakh per depositor for the entire duration of the Directions.

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Potential investors

Potential investors who have submitted expression of interest (EoI) to invest in the Bank include the Centrum Group-BharatPe combine and the UK-based Liberty Group.

RBI is likely to announce the name of the investor who will steer the fortunes of the Bank before the extended validity period of its Directions ends on March 31, 2021.

If PMC Bank revives with the help of an investor, it can serve as a template for the revival of other distressed urban co-operative banks.

The Directions against PMC Bank 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.

ALSO READRBI extends restrictions on PMC Bank to March

Conversion into SFB

AK Dixit, PMC Bank’s Administrator, in a letter to customers and stakeholders, said: “As you are aware, the bank had issued EoI on November 03, 2020, inviting investors for revival/ reconstruction of PMC Bank.

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

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.

The bank may also approach the Deposit Insurance and Credit Guarantee Corporation (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 was having total deposits of ₹ 10,727.12 crore, total advances of ₹ 4,472.78 crore and gross NPA (non-performing assets) of ₹ 3,518.89 crore as on March 31, 2020. Further, the share capital of the bank is ₹ 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.

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