RBI issues draft scheme for takeover of PMC Bank


The Reserve Bank on Monday came up with a draft scheme for the acquisition of Punjab and Maharashtra Cooperative (PMC) Bank by Delhi-based Unity Small Finance Bank (USFB). 

The draft scheme of amalgamation published today, envisages takeover of the assets and liabilities of PMC Bank including deposits, by the USFB in terms of the provisions of the scheme giving a greater degree of protection for the depositors, RBI said. 

“It may be seen that USFB is being set up with capital of about Rs 1,100 crore as against regulatory requirement of Rs 200 crore for setting up of a Small Finance bank under the Guidelines for on-tap licensing of Small Finance bank in Private Sector dated December 5, 2019, with provision for further infusion of capital at a future date after amalgamation,” the central bank further added.

When will PMC Bank depositors get their money?

The depositors of PMC Bank will get their money back over a period of three to ten years, according to the draft scheme of amalgamation.

Later, at the end of two years, the Bank will pay up to ₹50,000, and up to ₹1 lakh at the end of three years, ₹3 lakhs at the end of four years, ₹5.5 lakhs at the end five years and the full amount will be paid after ten years.

After ten years from the appointed date, the transferee bank may consider additional benefits for such PNCPS holders either in the form of providing a step up in coupon rate or a call option, upon receipt of approval from the Reserve Bank

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RBI said the interest on any of the interest bearing deposits with the Bank will not accrue after March 31, 2021.

No further interest will be payable on the interest bearing deposits of transferor bank for a period of five years from the appointed date. In respect of balances in any current account or any other non-interest bearing account, no interest shall be payable to the account holders, the draft scheme noted.

RBI said it would receive suggestions and objections on the draft scheme till 5.00 pm on December 10. Thereafter, it will take a final view on the takeover.To be sure, Unity Small Finance Bank Limited, a joint venture between Centrum Group and BharatPe, has commenced operations as a small finance bank with effect from November 1, 2021.

In September 2019, the RBI had superseded the board of PMC Bank and placed it under various regulatory restrictions after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL.The Reserve Bank of India (RBI) had imposed restrictions on the withdrawal of deposits from these stressed banks. Of the 20 banks, 10 are from Maharashtra, five from Karnataka, and one each from Uttar Pradesh, Kerala, Rajasthan, Madhya Pradesh, and Punjab.

Last year, the government increased the insurance cover on deposits by five times to Rs 5 lakh. The enhanced deposit insurance cover of Rs 5 lakh came into effect from February 4, 2020.

Every bank used to pay 10 paise as an insurance premium per Rs 100 of deposit. It was raised to 12 paise per Rs 100 in 2020. It cannot be more than 15 paise at any point in time per Rs 100 deposit.

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It is to be noted that the enhanced deposit insurance cover of Rs 5 lakh is effective from February 4, 2020. The increase was done after a gap of 27 years as it has been static since 1993.