Government approves PMC Bank amalgamation plan

The government Tuesday approved the plan for the amalgamation of the Punjab and Maharashtra Co-operative Bank (PMC Bank) with Unity Small Finance Bank (USFBL), a joint venture between Centrum Financial services and digital payments platform BharatPe.

“The scheme of amalgamation envisages takeover of the assets and liabilities of PMC Bank, including deposits, by the USFBL in terms of the provisions of the scheme,” the Reserve Bank of India said citing the government's sanction on the amalgamation plan.

The amalgamation will come into force from Tuesday itself as all the branches of the PMC Bank will function as branches of USFBL with immediate effect.

USFBL will have to pay the amount received from Deposit Insurance and Credit Guarantee Corporation to all the eligible depositors of the transferor bank, which would be an amount equal to the balance in their deposit accounts or Rs 5,00,000, whichever is less.

In the next 10 years, retail depositors will continue to receive their outstanding balance in a phased manner as stated in the government gazette.

No interest on any of the interest bearing deposits with the transferor bank shall accrue after March 31, 2021 for a period of five years from the appointed date, it said.

Simple interest at the rate of 2.75 percent every year shall be paid at the end of each year for the amounts remaining outstanding which shall be payable from the date after five years from the appointed date.

In October last year, a consortium of Centrum Financial Services and BharatPe received a Small Finance Bank (SFB) licence from the RBI. Centrum’s MSME and microfinance businesses were supposed to be merged into the new bank, christened as Unity Small Finance Bank.