The proposed takeover of the Punjab and Maharashtra Cooperative (PMC) Bank by Centrum Financial Services and BharatPe has received the approval of the Reserve Bank of India (RBI) albeit with a handful of riders attached to it.
While offering the in-principle approval, the RBI added that Centrum will need to transfer its stake in the proposed new bank to a non-operative financial holding company or NOFHC in under three and a half years of receiving the approval.
Read - PMC Bank Depositors Will Move Bombay HC Looking For An Early Return Of Deposits
Further, Centrum will also have to bring its regulated entities under the NOFHC umbrella within the same timeframe. This will include firms like Centrum Housing Finance, Centrum Microcredit, Centrum Wealth, Centrum Broking, Centrum Insurance and Centrum Alternatives, as per a letter accessed and quoted by Livemint.
The RBI maintained that Centrum won’t be allowed to offer home loans and microcredit services if it holds a majority stake in Centrum Housing Finance and Centrum Microcredit.
Former Deputy Governor of the RBI, Rama Subramaniam Gandhi said, “As per the regulations, no two entities can do the same kind of business. Hence, Centrum will have to take a call on whether to sell stake in the subsidiaries or merge it with the SFB.”
Group President of BharatPe, Suhail Sameer clarified that the new small finance bank (SFB) will focus solely on loans for SME (small and medium-sized enterprises), along with merchant and retail loans.
“The SFB will not do housing or corporate loans as we intend to give loans in the range ₹50,000 to ₹10 lakh to merchants, kirana store owners and retail customers,” Sameer said.
The consortium of BharatPe and Centrum announced plans to take over PMC Bank earlier this year. This comes as the depositors of PMC Bank continued to suffer from the bank’s precarious situation, with many unable to get their deposits back.
As per sources familiar with the matter, all depositors of PMC are eligible to receive a maximum amount of ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation. The remaining deposit amount, if any, will most likely be converted into a 10-year bond at 1 per cent interest, sources said.
Also read - PMC Bank Received Over 1,200 Deposit Withdrawal Applications Since April 2020
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