The Reserve Bank of India gave “in-principle” approval to
Financial Services to set up a small finance bank (SFB), paving the way for the takeover of Punjab and Maharashtra Cooperative (PMC) Bank in partnership with digital payments platform BharatPe.
“This ‘in-principle’ approval has been accorded in specific pursuance to the Centrum Financial Services Ltd’s offer dated February 1, 2021, in response to the expression of interest notification dated November 3, 2020, published by the Punjab & Maharashtra Co-operative Bank Ltd., Mumbai,” the RBI said in it notification.
The plan will involve absorbing the PMC Bank business into the proposed small finance bank, said people aware of the matter.
“The SFB will be guided by the directions and timelines of the RBI on the amalgamation of Punjab & Maharashtra Cooperative Bank Ltd,” said a joint statement issued by Centrum and BharatPe. “The RBI’s in-principle approval is a validation of Centrum’s proven expertise in financial services and BharatPe’s Digital Leadership, both essential for setting up a New Age Bank.”
The Jaspal Bindra-led non-bank finance company was one of four bidders for the failed lender that left thousands of customers unable to access deposits of Rs 10,727 crore two years ago. Top global banker Bindra joined the group five years ago and is now chairman of Centrum, which has been scouting for opportunities in banking. The other contenders for PMC Bank were the UK’s Liberty Group and two independent business houses from Hyderabad and Mumbai.
The central bank took control of PMC Bank in September 2019 following accusations of money laundering. The urban cooperative bank allegedly created fictitious assets of more than Rs 6,700 crore in the form of loans credited to Housing Development Infrastructure Ltd (HDIL), a tainted entity.
The Delhi High Court had directed the RBI and the Centre last year to explain how the depositors of PMC Bank were “differently circumstanced” in comparison with
, which had been rescued in a plan overseen by the regulator.
PMC Bank had total deposits of Rs 10,727.12 crore and total loans of Rs 4,472.78 crore on March 31, 2020. Gross bad loans reportedly added up to Rs 3,519 crore. It reported a net loss of Rs 6,835 crore in FY20, during which it had a share capital of Rs 293 crore, resulting in negative net worth.Internet Explorer Channel Network