RBI announces draft for PMC Bank's takeover by USFC; provisions payout for depositors

The Reserve Bank of India (RBI) on Monday issued a draft scheme for the acquisition of the Punjab and Maharashtra Cooperative (PMC) Bank. As per the scheme, the stressed bank will be taken over by Delhi-based Unity Small Finance Bank (USFB). The RBI has stated that the amalgamation envisages the takeover of the assets and liabilities of PMC Bank, including deposits, to give a greater degree of protection for the depositors.

“It may be seen that USFB is being set up with capital of about Rs 1,100 crore as against a 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 RBI draft scheme read.

How will the PMC bank depositors get their money?

According to the draft scheme, the RBI has assured that all depositors will be able to recover their money over a period of 3-10 years. The payment to the depositors will be done on a staggered basis. USFB will pay the amount guaranteed by DICGC of up to Rs 5 lakhs to depositors, however for the remaining amount, the bank will pay up to Rs 50,000 above the payment already made at the end of two years, up to Rs 1 lakh at the end of three years, Rs 3 lakhs at the end of four years, Rs 5.5 lakhs at the end five years and the entire remaining amount 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,” the draft scheme stated adding that the interest on any of the interest-bearing deposits with the transferor bank (PMC Bank) shall 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," it said. "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," the scheme added.

Suggestions have been invited by the RBI till 5.00 pm on December 10, after which it would take a final view of the takeover. It is to be noted that 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.

(With Agency Inputs) 

Image: PTI