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The Reserve Bank of India (RBI) has extended the validity of its Directions to the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank for a further period from July 1 to December 31, 2021, subject to review.
RBI extended the validity of its directions by six months, taking into account the time required for completion of various activities involved in the process of rescuing the bank.
The central bank, in a statement, 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.
SFB proposal
“Accordingly, in specific pursuance to their offer dated February 1, 2021, in response to the EOI, RBI has, on June 18, 2021, granted “in-principle” approval, valid for 120 days, to CFSL to set up a small finance bank (SFB)…,”RBI said in a statement.
Once the SFB is floated, PMC Bank would be merged into 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.
Chander Purswani, President, PMC Depositors Forum, emphasised that the central bank must ensure that retail depositors get all their savings back.
Currently, withdrawals from PMC Bank are capped at ₹1 lakh per depositor for the entire duration that it is under RBI Directions. The bank has been under Directions with effect from the close of business on September 23, 2019.
The bank got into trouble due to fraud/ financial irregularities associated with huge exposure, which according to reports was at 73 per cent of its total advances, to a real estate group and manipulation of its books of accounts.
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