The Punjab and Maharashtra Co-operative Bank Ltd (PMC Bank) branches will operate as Unity Small Finance Bank Ltd. branches from January 25, 2022, the RBI said in a press release.
This follows the Government of India today sanctioning and notifiying the scheme for the amalgamation of Punjab and Maharashtra Co-operative Bank Ltd (PMC Bank) with Unity Small Finance Bank Ltd, the RBI said.
The amalgamation will come into force from the date of the notification of the scheme i.e. January 25, 2022, the RBI said.
"All the branches of the PMC Bank will function as branches of Unity Small Finance Bank Ltd with effect from this date," the release said.
Further, USFBL is making necessary arrangements to implement the provisions of the scheme, the RBI said.
The scheme of amalgamation notified today envisages takeover of the assets and liabilities of PMC Bank, including deposits, by the USFBL in terms of the provisions of the scheme, the RBI said.
The RBI superseded PMC Bank board in September 2019 following a major fraud. About 70 percent of its total loan book of Rs 8,383 crore as on March 31, 2019, had been taken by real estate firm HDIL. The bank had Rs 11,600 crore in deposits. The police arrested Joy Thomas, former managing director of the PMC Bank, in October. The investigators have since made a few more arrests.
During investigations, it was found that the bank had been allegedly running fraudulent transactions for several years to facilitate lending to HDIL through fictitious accounts and violating single-party lending rules. The RBI imposed restrictions on deposit withdrawals and superseded its board after the fraud was detected.
According to the bank, it had total deposits of Rs 10,727.12 crore, total advances of Rs 4,472.78 crore and gross NPA of Rs 3,518.89 crore as on March 31, 2020. The share capital of the bank is Rs 292.94 crore. The bank registered a net loss of Rs 6,835 crore during 2019-20 and has a negative net worth of Rs 5,850.61 crore.
As per the draft scheme details, the acquiring bank (Unity SFB) will pay the amount guaranteed by DICGC (Deposit Insurance and Credit Guarantee Corporation) i.e. up to Rs 5 lakh to depositors. For the remaining amount, the bank will pay up to Rs 50,000 above the payment already made at the end of two years, at the end of three years an amount of up to Rs one lakh will be paid, at the end of four years up to Rs 3 lakh and at the end of five years, Rs 5.5 lakh and the entire remaining amount will be paid after 10 years, on demand.
The interest on any of the interest bearing deposits with the transferor bank (PMC Bank) shall not accrue after March 31, 2021, the RBI said. No further interest will be payable on the interest bearing deposits of transferor bank for a period of five years from the appointed date. In respect of balances in any current account or any other non-interest bearing account, no interest shall be payable to the account holders, according to the scheme.
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