Mumbai: Paving the way for 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 takeover of the PMC 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 (November 3, 2020) published by the PMC Bank Ltd,” the RBI said in a statement.
The RBI said that it has granted ‘in-principle’ approval to Centrum Financial Services to set up a small finance bank under the general ‘Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector’.
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In September 2019, the RBI had superseded the board of PMC and placed it under regulatory restrictions, including cap on withdrawals by its customers, after detection of certain financial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 time 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.
Also read: How PMC Bank hid its bad loans and duped RBI for years