Mumbai: Four entities have shown interest in acquiring troubled lender Punjab and Maharashtra Cooperative Bank, paving the way for a resolution that could end the misery of lakhs of depositors, which began when it was put under restrictions in September last year.
In November this year, PMC Bank invited expression of interest (EoI) from entities to take over, with the deadline for submitting the EoIs ending Tuesday evening.
“Four entities have submitted the expression of interest. Now the applications will be scrutinised,” said a source aware of the developments.
The applicants are a combination of financial sector players and corporate entities, and sources said these entities should meet the Reserve Bank of India’s fit and proper criteria.
Potential investors will have the option to convert PMC Bank into a small finance bank, provided they meet the RBI’s licencing conditions. The lender will need RBI’s approval for such a conversion.
How much investment is required for revival
PMC Bank, a multi-state cooperative lender, has a presence in Maharashtra, Delhi, Karnataka, Goa, Gujarat, Andhra Pradesh and Madhya Pradesh, with 137 branches.
It was put under restrictions by the RBI in September 2019 following irregularities that impacted its financial health. Initially, deposit withdrawal was capped at Rs 1,000, which has been raised to Rs 1 lakh now.
The bank’s net worth is negative, and it will need around Rs 5,850 crore to bring it back to zero, and another Rs 1,000 crore to maintain a minimum capital adequacy ratio of 9 per cent and start the business.
In effect, the new investor needs to put in around Rs 7,000 crore to revive PMC Bank.