Money & Banking

To revive scam-hit PMC Bank, 3 entities submit letter of intent

Our Bureau. Mumbai | Updated on December 16, 2020

Surinder Mohan Arora of Ideal Group among the three that submitted the LoI

A Mumbai-based financial services group is among the three entities that are understood to have submitted letter of intent (LoI) to revive the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank.

Last date for LoI

The last date for the submission of LoI to the bank’s Administrator was December 15. The Administrator, AK Dixit and his team, are weighing the pros and cons of the LoIs. Based on their recommendations, the Reserve Bank of India (RBI) will take a call on which entity is best placed to revive the bank and commence regular day-to-day operations. As the aforementioned process is expected to take a few months, the central bank is expected to extend the validity of its Directions, currently valid up to December 22, by three months.

According to banking sources, the financial services group, which has submitted its LoI, is headed by the former India head of a foreign bank.

Mumbai-based Surinder Mohan Arora (Ideal Group), along with persons acting in concert, is also understood to have submitted the LoI. There is one more entity which has submitted the LoI, but its name could not be ascertained.

Dixit, in a communication to customers last month, said: “We are working on finding a way out to resolve the bank in the best interest of all stakeholders, particularly the depositors.

“Various models/ options are being considered, and discussions are continuing with different entities in this regard. Inspite of the pandemic-induced hurdles, the matter is engaging our close attention under the guidance of the RBI.

Revival of lender

Chander Purswani, President of PMC Depositors Forum, expects the bank to be revived in the next couple of months. This will allow the harried depositors (many had parked their lifetime savings in the bank) access their monies, he added.

He emphasised that due to the ₹1 lakh withdrawal cap per depositor for the entire 15-month period the bank is under Directions, depositors are facing untold miseries.

PMC Bank was placed under RBI Directions from the close of business of the bank on September 23, 2019, due to a huge fraud perpetrated by the promoter of a real estate group and some bank officials.

As per the Expression of Interest, the bank wants to identify a suitable equity investor/ group of investors willing to take over management control so as to revive the bank and commence regular day-to-day operations.

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 Reserve Bank of India, subject to compliance of the RBI guidelines on Voluntary Transition of Primary (Urban) Co-operative Banks (UCBs) into Small Finance Banks (SFBs), it added.

Published on December 16, 2020

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