Tag: pmc bank

PMC Bank’s rescue plan did have its own dilemma

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Centrum or nothing. This was probably the dilemma the Reserve Bank of India (RBI) faced before deciding to grant ‘in-principle’ approval to Centrum Financial Services (CFSL) to set up a small finance bank (SFB) so that it rescues the scam-hit Punjab & Maharashtra Co-operative (PMC) Bank.

While two other entities —UK-based Liberty Group and Ideal Group —also showed interest in taking over PMC Bank in response to its Expression of Interest (EOI) floated in November 2020, CFSL made the cut as it was the only player with experience in the financial services space.

RBI bet on CFSL notwithstanding the fact that its parent Centrum Capital’s consolidated net loss widened to ₹36 crore in the nine months-ended December 31, 2020, against ₹24 crore in the year ago period. The company made a net profit of ₹71.57 lakh in FY20.

Also read: PMC Bank’s resolution could become a template for rescuing other weak UCBs

Fintech company BharatPe, which is among the top UPI P2M players with an 8.8 per cent market share as in March 2021, will be CFSL’s equal partner in floating the SFB, which will acquire PMC Bank.

Banking expert V Viswanathan said RBI could have tried the “Swiss Challenge” method for the proposed amalgamation/merger of PMC Bank, giving an opportunity to other non-banking finance companies to better CFSL’s bid.

As per PMC Bank’s EOI, the investors can explore the option of restructuring a part of deposit liabilities into capital/capital instruments and the SFB may also approach the Deposit Insurance and Credit Guarantee Corporation (DICGC) for its support for payment up to ₹5 lakh (insured deposits) to depositors.

“No plan B”

“Probably there was no Plan B. So, they had to make Plan A (inviting bids and zeroing-in on the successful bidder) work as depositors were suffering for the last 20 months due to the deposit withdrawal cap amid the pandemic,” said a depositor.

Viswanathan said depositors with deposits up to ₹5 lakh are likely to get their money fast as DICGC may settle their claim first. For deposits of individuals above ₹5 lakh, there could be a phased withdrawal plan. For non-individuals, probably, a portion can be withdrawn in phases and another portion could be converted into tier-I/ tier-II capital.

Among non-individuals holding deposits with PMC Bank, there are urban co-operative banks, two RBI employees’ co-operative credit societies, housing societies, and Gurudwaras.

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Centrum-Bharatpe joint venture to pump Rs 1,800 crore into PMC on merger, BFSI News, ET BFSI

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The joint venture floated by Centrum Group and digital payments startup Bharatpe for launching a small finance bank will infuse Rs 1,800 crore capital into troubled Punjab & Maharashtra Cooperative Bank (PMC) on its merger with the proposed bank, a top Centrum official has said. Last Friday, the Reserve Bank gave an in-principle approval to Centrum Financial Services, a step-down arm of the diversified financial services group, to set up a small finance bank (SFB) provided it took over the troubled PMC Bank.

The in-principle approval has been in specific pursuance to Centrum Financial Services’ offer on February 1, 2021 in response to the expression of interest notification dated November 3, 2020 published by the PMC Bank, the RBI said.

This paves the way for ending nearly two anxious years for the PMC depositors whose over Rs 10,723 crore are still stuck in the crippled cooperative bank that has been under RBI administrator since September 2019.

To launch SFB, the Centrum Group has sewed up an equal joint venture with Resilient Innovations, an arm of Gurugram-based Bharatpe. But Centrum Capital will be the promoter of SFB, under the prevailing laws, the group said.

“We (the SFB joint venture) have set aside Rs 1,800 crore for the SFB, which eventually will be pumped into PMC once the government scheme for merger is notified. Of the Rs 1,800 crore, Rs 900 crore will be invested in the first year by the joint venture split equally between the two and the remaining capital in stages,” Jaspal Bindra, executive chairman of Centrum Group, told over the weekend.

Whether they will take over the more than Rs 6,500 crore of NPAs of PMC and also the over Rs 10,700 crore of its deposits, Bindra said that will be known only after the government notified the merger scheme.

“What terms and conditions the government will set in the merger scheme will decide the fate of huge bad loans and losses. In fact, this is the only little unknown we have as of now,” Bindra quipped.

That the groups have allocated nine-times more capital over the RBI mandate of Rs 200 crore for the SFB shows the seriousness of the promoters. If it succeeds, this will be the first SFB in nearly six years — the first set of SFB licences were issued in August 2016, when the monetary authority also made such licensing on-tap.

Bindra, who was the group executive director and chief executive for Asia Pacific at Standard Chartered Bank till 2015, joined Centrum in April 2016 as executive chairman and picked up around 25 per cent, also said they will surrender all their NBFC licences before launching the SFB.

“The RBI has given us 120 days to complete the other “fit and proper conditions” to seek the final licence, which I am very confident of meeting well in time. In fact, we will be seeking the final licence as soon as possible,” he said.

Asked he chose a startup to form an equal joint venture for its banking foray, Bindra said, for one, very few players have the technological edge that Bharatpe has. “For another, we’ve been having strong business relationships with the Gurugram startup since the very first day of its operations.”

“So we are known to each other since 2018 and moreover our businesses complement each other and the SFB will definitely be a tech-driven bank for sure. In fact, we have had a full joint agreement in place much before we sought the licence and we joint bided for the licence,” he added.

Asked if the focus on technology will lead to branch rationalisation of PMC, he said when it comes to lending it will be tech driven “but for deposit raising we have to have branches. So in effect we may have to retain the branches to a large extent”.

The city-based Centrum Group, founded by Chandir Gidwani and Khushrooh Byramjee in 1977, has a diversified fee business and a lending platform for institutions and individuals. It offers investment banking, mid-corporates & SME lending, and broking for institutions and retail. It also provides MSME credit, wealth management, affordable housing and micro lending, apart from private debt and venture capital.

Centrum Capital, which is listed on the exchanges, reported a net loss of Rs 16.02 crore in Q3 of FY21 as against a net profit of Rs 3.35 crore in Q3 of FY20 as its income declined 7.2 per cent to Rs 123.12 crore in the quarter.

On the other hand, 2.5-year-old Bharatpe closed FY21 with an operating income of over Rs 700 crore, up from Rs 110 crore in FY20, driven by its credit business that closed the year with a loan book of Rs 1,600 crore, its president Suhail Sameer had told last week.

As of March 2020, PMC’s deposits stood at Rs 10,727.12 crore, advances at Rs 4,472.78 crore and gross NPAs at Rs 3,518.89 crore and net loss of Rs 6,835 crore, with a negative networth of Rs 5,850.61 crore.

The PMC book was so bad that as much as 73 per cent of its assets worth over Rs 6,500 crore of the total Rs 8,880 crore loans were to the crippled developer HDIL and all of them had turned dud by September 2019.

A good portion of the deposits are of senior citizens and cooperative societies including an RBI officers association. Its share capital is Rs 292.94 crore.

Bindra said they are yet to finalise the name for the SFB but added it will not be PMC for sure. The board is more or less in place and I will certainly be a part of it, he said.



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NCUI, BFSI News, ET BFSI

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Cooperative body NCUI has welcomed the RBI’s in-principal nod to Centrum Financial Services for the takeover of PMC Bank, but said all depositors should get back their deposits without any condition. Paving the way for the takeover of crisis-ridden Punjab and Maharashtra Cooperative Bank (PMC), the Reserve Bank of India on Friday granted in-principle approval to the Centrum Financial Services to set up a small finance bank.

Centrum Financial Services was one of the applicants for the takeover of the PMC Bank.

Reacting to RBI’s in principle approval to Centrum Financial Services, NCUI President Dileep Sanghani in a statement said, “This is indeed welcome. However, it should be ensured that all the depositors should get back their deposits without any conditionality.”

However, he said it would have been better if all the big UCBs should have mobilised the funds together to revive the bank.

National Federation of Urban Cooperative Banks and Credit Societies Ltd (NAFCUB) President Jyotindra Mehta said, “This is in accordance with the wishes of the sector, and the depositors. This will no doubt boost the image of the sector. However, the culprits who committed the fraud in the bank must be punished.”

GH Amin, Chairman, Cooperative Bank of India, and Chairman, Gujarat State Cooperative Union welcomed the move. “It is a good gesture, of taking over a crisis-hit bank by a small finance bank, and reviving it. The depositors will get an assurance of getting back their deposits.”

National Federation of State Co-operative Banks Ltd (NAFSCOB) MD Bhima Subrahmanyam said, “The move is indeed appreciable. However, all the depositors should get back their deposits without any conditionality”.

Large urban cooperative banks should have taken over PMC Bank and started a small finance bank, as the PMC had an excellent image before the fraud happened, he added. Subrahmanyam is also President International Cooperative Banking Association.

On Friday, the RBI gave ”in-principle” approval to the Centrum Financial Services Limited’s offer of February 1, 2021, for the takeover of PMC Bank Ltd.

The PMC Bank had invited Expression of Interest (EoI) from eligible investors for investment/ equity participation for its reconstruction and had received four proposals.

In September 2019, the RBI had superseded the board of PMC and placed it under regulatory restrictions, including cap on withdrawals by its customers, after detection of certain financial irregularities, hiding and mis-reporting of loans given to real estate developer HDIL.

The restrictions have been extended several times since then. PMC’s exposure to HDIL was over Rs 6,500 crore or 73 per cent of its total loan book size of Rs 8,880 crore as of September 19, 2019.

Initially, the RBI had allowed depositors to withdraw Rs 1,000 which was later raised to Rs 1 lakh per account to mitigate their difficulties.

In June 2020, the RBI had extended the regulatory restrictions on the cooperative bank by another six months till December 22, 2020.

As of March 31, 2020, PMC Bank”s total deposits stood at Rs 10,727.12 crore and total advances at Rs 4,472.78 crore. Gross non-performance assets of the bank stood at Rs 3,518.89 crore at end-March, 2020.



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PMC Plan: BharatPe and CFS will collectively infuse between Rs 500-3,000 crore in SFB

Personal Finance

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“We do not know how much amount existing PMC Bank depositors will be able to withdraw, but we want to allow them withdrawing as much as possible,” he further said.

By Ankur Mishra

Centrum Financial Services and BharatPe, will collectively infuse anywhere between Rs 500-3,000 crore capital in the small finance bank (SFB) as per requirement, according to BharatPe group president Suhail Sameer. In an interaction with FE, he said both the partners have agreed to put an equal amount in the bank which will start with Rs 500 crore capital. He also said a final call on PMC Bank depositors will be taken after the amalgamation scheme is prepared by the regulator.

“One thing was clear in our discussion with RBI that interest of depositors is supreme,” Sameer said. According to him the new owners want to allow PMC depositors to withdraw as much as possible from the bank. “We do not know how much amount existing PMC Bank depositors will be able to withdraw, but we want to allow them withdrawing as much as possible,” he further said.

Without sharing details of exact asset-liability mismatch in PMC Bank, Sameer said they have a plan in mind to tackle the same, which is yet to be approved by the regulator.

In the next 3-4 months, the focus for Centrum-BharatPe will be to make small finance bank (SFB) operational, after Reserve Bank of India (RBI) has granted in principle approval to set up SFB on Friday. Under Section 45 of the Banking Regulation Act one can only prepare a merger scheme between two banks and, therefore, the process will start only once SFB is set up. BharatPe expects to extend its existing relationship with its merchants by offering them savings and current accounts, along with banking and credit services.

“Initially high interest rates on deposits will be our pull factor, but overall we want to offer convenience to our customers,” Sameer said. With the kind of reach BharatPe has, mobilising deposits should not be an issue for our bank, he added.

BharatPe facilitates over Rs 200 crore of loans to its merchant partners every month through its NBFC partners. The company has deployed more than 50,000 point of sales (PoS) machines and enables transactions of more than Rs 900 crore per month on PoS machines. BharatPe has presence in 75 cities in the country.

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PMC Bank’s resolution could become a template for rescuing other weak UCBs

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Depositors of about 50-odd weak urban co-operative banks (UCBs), which are currently under the Reserve Bank of India’s Directions, may now have some hope of getting back their deposits.

This hope arises from the proposed amalgamation of the scam-hit Punjab and Maharashtra Co-operative (PMC) Bank with a small finance bank (SFB) that will be floated by the Centrum Financial Services and BharatPe combine.

Template for weak UCBs

Co-operative sector experts say if the amalgamation fructifies, it could become a template for rescuing other weak UCBs in the country. Since April 1, 2015, 52 UCBs (as on December 11, 2020) have been placed under All Inclusive Directions by the Reserve Bank, as per the RBI’s latest Report on Trend and Progress of Banking in India.

 

Once a UCB is placed under Directions, deposit withdrawal is capped. The bank also cannot grant or renew any loans and advances, make any investment, incur any liability, among others. While stressed UCBs are placed under Directions by the central bank to nurse them back to health, many stay under Directions for years, bringing a lot of misery to depositors.

September 2020 amendment

Jyotindra Mehta, President, The National Federation of Urban Cooperative Banks and Credit Societies , observed that resolution of weak UCBs has brightened after the September 2020 amendment to the Banking Regulation (BR) Act, 1949, as a UCB can be merged with any bank, be it a SFB, universal bank or another UCB. “Earlier, merger was not possible. There was only takeover of the assets and liabilities of weak UCBs by another bank. But now a clear path to resolution via amalgamation is available,” Mehta said

There have been earlier instances of commercial banks taking over specific assets and liabilities of UCBs. In 2009-10, Indian Overseas Bank took over specific assets and liabilities of Pune-based Shree Suvarna Sahakari Bank. In 2011-12, Bank of Baroda took over around 15 branches of Mumbai-based Memon Co-operative Bank.

Also read: PMC Bank receives 1,229 applications for deposit withdrawal

Saraswat Bank, India’s largest UCB, had acquired seven stressed UCBs (Maratha Mandir Co-operative Bank, Mandvi Co-operative Bank, Annasaheb Karale Janata Sahakari Bank, Murgha Rajendra Sahakari Bank, Kolhapur Maratha Co-operative Bank, South Indian Co-operative Bank and Nashik People’s Co-operative Bank) during the 2006-2009 period.

Co-operative banking expert Vinayak Tarale underscored that BR Act, 1949, was amended in the wake of the debacle at PMC Bank.

“PMC Bank’s resolution, if successful, can become a test case. Other small finance banks too may feel encouraged to takeover distressed UCBs and expand their area of operation. The acquiring banks will get a ready-made branch network and customers,” he said.

Tarale emphasised that on an average, priority sector advances (loans to micro and small enterprises, housing, agriculture, etc. account for about 50 per cent of UCBs overall loan portfolio and this could engage SFBs’ attention.

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It’s a bank, PMC will be part of, it’s not takeover, says Centrum’s Jaspal Bindra, BFSI News, ET BFSI

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For Jaspal Bindra, who headed Standard Chartered Bank’s Asia operations in his 40s, the road back to banking is a challenging one. Bindra, who exited StanChart to turn entrepreneur by acquiring a stake in Centrum in 2016, will have to build a bank by merging operations of a failed local cooperative, a non-banking finance company and a new age digital lender.

For Bindra, who has been pursuing a bank licence for some time, the RBI’s quest for a white knight for Punjab and Maharashtra Cooperative Bank (PMC) provided that opportunity. The RBI has granted Centrum 120 days to convert itself into a bank with fintech player BharatPe as an investor who will merge its payment business with the bank. “We are seeing it as a bank which PMC will be a part of and not a takeover. We are capitalising it abundantly so that we will have room to do other things and PMC’s operations will not dominate the new bank,” said Bindra.

“As against the Rs 200-crore minimum capital required for a small finance bank, we are committing to bringing in Rs 900 crore in the first year and we have further committed Rs 900 crore from both of us. In all, we are committing Rs 1,800 crore,” said Bindra. He added that currently the partners are self-sufficient for capital and funds would be raised only at a later day.

Bindra agrees that PMC Bank has a large hole in its books which Centrum examined in January before making the bid. It is not yet clear to what extent the hole will get filled as the Deposit Insurance and Credit Guarantee Corporation would pay out depositors only after the RBI invokes Section 45 of its Act which has the same effect as a bankruptcy resolution and does not leave scope for any additional payments outside the plan notified by the government.

Both Centrum and Bharat Pe will have to follow RBI’s diktat and undertake all financial businesses within the new bank and not in group companies. This means that the bank will begin with Centrum’s sizeable loan book and BharatPe’s large payment business.

“The PMC loan book is wholesale which is not part of our business, and this will be a runoff. This will not exist in our future as we want to be a pure digital play with over 85% of business being done on the digital platform. The offline presence will be for only those segments of society without digital access,” said Bindra.

The government notification will also determine the terms for the staff of PMC Bank. “For PMC staff we will have to see what comes in the government notification. For our existing staff, we are going to choose the best person between Centrum, BharatPe and the market. We are going to plan talent for the longer term. It does not mean that there will be layoffs as there will be jobs outside the bank for Centrum and BharatPe,” said Bindra.

While there is no guarantee that customers will retain their deposits once the new bank opens its doors, Bindra sees value in the retail deposit franchise. “The branch network is relevant from deposit collection point. They were quite exceptional in their service quality, and we will be happy to have the staff as a valuable addition to the group. They have Finacle which is a leading software platform,” said Bindra. Besides the amalgamation of unlikely partners, the PMC resolution is an experiment at several levels. This is the first time that the RBI is using the lure of a bank licence to refloat a failed bank. This would also be the first time that an old-world business is being moved onto a digital system.



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RBI paves way for Punjab & Maharashtra Cooperative Bank’s revival

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The RBI said on Friday the nod to CFS had been given specifically with regard to the latter’s response to the expression of interest (EoI) from PMC Bank on November 3, 2020.

By Ankur Mishra

With the Reserve Bank of India (RBI) having given Centrum Financial Services an in-principle nod to set up a small finance bank (SFB), a solution to the troubles of Punjab & Maharashtra Cooperative (PMC) Bank, seems to be in sight. The RBI said on Friday the nod to CFS had been given specifically with regard to the latter’s response to the expression of interest (EoI) from PMC Bank on November 3, 2020.

CFS and BharatPe had put in a bid to acquire the co-operative lender and the acquisition is expected to go through soon after CFS wins a licence. Should it go through it would be the third lender, in recent times, to be rescued after Yes Bank and Lakshmi Vilas Bank.

PMC Bank posted a net loss of Rs 6,835 crore in FY20, reporting a negative net worth of Rs 5,850.61 crore as per the bid document. In September 2019, PMC Bank was put under charge of an RBI-appointed administrator after some financial irregularities were detected.

The regulator had superseded the board and capped withdrawals by customers. At the time, PMC’s exposure to real estate firm HDIL was over Rs 6,500 crore or 73% of its total loan book of Rs 8,880 crore. HDIL was promoted by Rakesh Wadhawan and his son Sarang Wadhawan and a CBI inquiry was initiated into dealings between PMC and HDIL.

Initially, the RBI had allowed depositors to withdraw Rs 1,000, but that was later raised to Rs 1 lakh per account. At the end of March 2020, PMC’s total deposits were of the order of Rs 10,727.12 crore while the advances were Rs 4,472.78 crore. The gross non-performing assets (NPAs) stood at Rs 3,518.89 crore. The bank’s share capital is Rs 292.94 crore.

PMC had invited eligible investors to revive it and received four responses. RBI governor Shaktikanta Das had confirmed that three investors submitted their final offers for the resolution of the crisis ridden lender. Investors need to bring in the capital to enable the bank to achieve the mandated minimum capital to risk weighted assets ratio (CRAR) of 9%. However, investors may explore the option of restructuring a part of deposit liabilities into capital instruments, the EoI document said.

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RBI grants ‘in principle’ nod to Centrum Financial for setting up SFB

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The Reserve Bank of India (RBI) on Friday said it has decided to grant “in-principle” approval to Centrum Financial Services Ltd to set up a small finance bank (SFB). This will come as a huge relief for scam-hit Punjab and Maharashtra Co-operative Bank’s depositors as Centrum is set to take over their Bank.

“This “in-principle” approval has been accorded in specific pursuance to the Centrum Financial Services Limited’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,” RBI said in a statement.

The “in-principle” approval is under the general “Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector” dated December 5, 2019.

Many PMC Bank depositors are struggling to make ends meet amid the pandemic as the RBI put the Bank under Directions in September 2019, capping deposit withdrawal at ₹1 lakh per depositors for the entire duration of the Directions.

With Centrum Financial Services set to become an SFB, the directions on PMC Bank may be lifted.

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Govt may table amendment to DICGC Act in monsoon session, BFSI News, ET BFSI

Banking & Finance

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In a bid to ensure timely support to depositors of stressed banks, the government may bring amendment to DICGC Act in the monsoon session with the objective to provide account holders easy and time-bound access to funds to the extent of the deposit insurance cover.

Last year, the government raised insurance cover on deposit five-folds to Rs 5 lakh with a view to provide support to depositors of ailing lenders like Punjab and Maharashtra Co-operative (PMC) Bank. Following the collapse of PMC Bank, Yes Bank and Lakshmi Vilas Bank too came under stress leading to restructuring by the regulator and the government.

The amendment to the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act, 1961 is the budget announcement made by the Finance Minister and the Bill is almost ready, sources said.

It is expected that the Bill will be tabled in the upcoming monsoon session after being vetted by the Union Cabinet, sources added.

Once the Bill becomes the law, it will provide immediate relief to thousands of depositors who had their money parked in stressed lenders such as PMC Bank and other small cooperative banks.

As per the current provisions, the deposit insurance of up to Rs 5 lakh comes into play when the licence of a bank is cancelled and liquidation process starts.

DICGC, a wholly-owned subsidiary of the Reserve Bank of India, provides insurance cover on bank deposits.

Finance Minister Nirmala Sitharaman in the Budget speech in February said the government had approved an increase in the Deposit Insurance cover from Rs 1 lakh to Rs 5 lakh for bank customers last year.

“I shall be moving amendments to the DICGC Act, 1961 in this session itself to streamline the provisions, so that if a bank is temporarily unable to fulfil its obligations, the depositors of such a bank can get easy and time-bound access to their deposits to the extent of the deposit insurance cover. This would help depositors of banks that are currently under stress,” she had said.

It could not be presented in the Budget session due to curtailment of the last session following the spread of second wave of COVID-19 pandemic.

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 was static since 1993. The cover is provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of the RBI.

With increased insurance cover, the banks are paying a higher premium of 12 paise against 10 paise per Rs 100 deposited without any additional burden on account holders.

The deposit insurance scheme covers all banks operating in India, including private sector, cooperative and even branches of foreign banks. There are some exemptions such as deposits of foreign governments, deposits of central and state governments, and inter-bank deposits.

It can be recalled that way back in 2009, the Raghuram Rajan committee on financial sector reforms had recommended strengthening the capacity of the DICGC, a more explicit system of prompt, corrective action, and making deposit insurance premia more risk-based.



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The financial condition of PMC Bank continues to be precarious: RBI

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The Reserve Bank of India said any generalisation for release of funds to meet ‘financial needs’ of scam-hit Punjab and Maharashtra Co-operative (PMC) Bank’s depositors may not be appropriate and sustainable, owing to the bank’s precarious financial position.

The central bank made the aforementioned observation in its affidavit filed in the Delhi High Court in reply to consumer rights activist Bejon Kumar Misra’s petition.

Also read: Distraught depositors want PMC Bank revived soon

Through the petition, Misra is seeking immediate release of emergency funds to meet financial needs arising out of out-break of second wave of Covid-19 and to declare extension of directions issued to PMC Bank under the Banking Regulation Act 1949 as ultra vires.

In its reply, the central bank said there is no merit in the relief sought by the petitioner for immediate release of emergency funds to meet the financial needs arising out of sudden out-break of second wave of Covid-19, as depositors are already allowed to withdraw up to ₹5 lakh on hardship grounds for treatment of terminal illnesses, including treatment of Covid-19.

The RBI further submitted that to make the process of withdrawal on hardship grounds easier and to avoid delays in sending such recommendation to RBI for approval, the authority for approving the payment under hardship grounds has been delegated to the PMC Bank.

“…it is the duty of PMC Bank to pay hardship amount to the eligible depositors as per directions of RBI and subject to availability of liquidity with PMC Bank,” RBI said.

Takeover/ merger

The RBI submitted that the financial condition of PMC Bank continues to be precarious, with its liquidity position not improving enough to allow much room for enhancement of withdrawal limit.

Further, the bank also needs to maintain bare minimum liquidity to run as a going concern and to make itself viable for prospective investors for takeover/ merger etc. Then the reconstruction of the bank will be feasible, which will be in the interest of larger body of depositors, the central bank said.

Due to precarious financial condition of PMC Bank and on account of significant deposit erosion, serious financial irregularities and mismanagement of affairs of the bank and to protect the interest of the depositors in general and in public interest, RBI had placed PMC Bank under directions vide directive dated September 23, 2019, the affidavit said.

Withdrawal limit

The directions are presently valid up to June 30. The withdrawal limit per depositor is capped at ₹1 lakh.

“It is submitted that all efforts are underway to expedite consultations with the prospective investors who have submitted their final offer, in order to arrive at best possible resolution in the interest of all depositors and other stakeholders of the bank,” the central bank said.

The Centrum Group-BharatPe combine is believed to be the font-runner to takeover PMC Bank.

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