RBI Extends Regulatory Restrictions On PMC Bank Till December: Here’s Why

The Reserve Financial institution on Friday prolonged the regulatory restrictions on Punjab and Maharashtra Cooperative (PMC) Financial institution by one other six months until December 2021 to allow the completion of its takeover by Centrum Monetary Providers. Paving the best way for takeover of the crisis-ridden financial institution, the RBI had earlier within the month granted in-principle approval to Centrum Monetary Providers to arrange a small finance financial institution (SFB).

“Considering the time required for completion of assorted actions concerned within the course of…the validity of the …Directive dated September 23, 2019, as modified occasionally, has been prolonged for an extra interval from July 1, 2021 to December 31, 2021, topic to assessment,” the RBI mentioned in a notification.

In September 2019, the RBI had outmoded the board of PMC Financial institution and positioned it underneath regulatory restrictions, together with cap on withdrawals by clients, after detection of sure monetary irregularities, hiding and misreporting of loans given to actual property developer HDIL. The restrictions have been prolonged a number of occasions since then.

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 prolonged the regulatory restrictions on the cooperative financial institution by six months until December 22, 2020. Later it was additional prolonged until June 30, 2021.

In response to an Expression of Curiosity (EOI) floated by PMC Financial institution for its reconstruction in November 2020, sure proposals have been acquired. After cautious consideration, the RBI mentioned, the proposal from Centrum Monetary Providers together with Resilient Innovation was discovered to be prima facie possible.

Accordingly, the RBI on June 18, 2021 granted ”in-principle” approval to Centrum Monetary Providers to arrange a small finance financial institution underneath the final tips for ”on faucet” Licensing of Small Finance Banks within the Personal Sector.

PMC Financial institution had invited EoI from eligible buyers for funding/ fairness participation for its reconstruction and had acquired 4 proposals. To launch the SFB, the Centrum Group has shaped an equal three way partnership with Resilient Improvements, an arm of Gurugram-based BharatPe. However Centrum Capital would be the promoter of SFB, underneath the prevailing legal guidelines.

The three way partnership will infuse Rs 1,800 crore capital into PMC, Jaspal Bindra, government chairman of Centrum Group had mentioned.

As of March 31, 2020, PMC Financial institution’s whole deposits stood at Rs 10,727.12 crore and whole advances at Rs 4,472.78 crore. Gross NPAs have been at Rs 3,518.89 crore at end-March, 2020.