RBI Prepares Scheme For PMC, Unity Small – Latest news headlines

RBI has prepared a draft plan for PMC Bank’s amalgamation with Unity Small Finance Bank

Reserve Bank of India (RBI) on Monday unveiled a draft scheme for amalgamation of the troubled Punjab and Maharashtra Cooperative Bank (PMC) and Unity Small Finance bank (USFB).

The draft plan proposes USFB taking over the assets and liabilities of PMC Bank including deposits, which would provide a greater degree of protection to depositors.

RBI has sought suggestions or objections, if any, from depositors, members and creditors of PMC Bank as well as of USFB on the scheme by December 10, 2021. After the expiry of the deadline, the central bank will take a final call on the matter.

The plan has been put up on the central bank’s website.

The RBI further said that “USFB is being set up with capital of about Rs 1,100 crore as against a regulatory requirement of Rs 200 crore for setting up of a small finance bank under the guidelines for on-tap licensing of small finance bank in private sector dated December 5, 2019, with provision for further infusion of capital at a future date after amalgamation”.

Maharashtra-based PMC Bank was placed under business restrictions with effect from September 23, 2019, on account of fraud, which led to steep deterioration in the net worth of the bank.

The directions were last extended through a June 25, 2021 directive up to December 31, 2021.

“Given the financial condition of the PMC Bank and in the absence of proposals for capital infusion, the bank was not viable on its own. In that event, the only course of action could have been cancellation of its licence and taking it for liquidation, wherein depositors would have received payment up to the insurance ceiling of Rs 5 lakh,” the RBI said.

Keeping in mind the interest of its depositors, the amalgamation scheme has been unveiled, which would provide them protection, the central bank said.

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Latest News Today – Centrum-BharatPe Consortium Will Set Up Bank Within 120

Reserve Bank of India has approval to Centrum Financial Services Ltd to form a small finance bank

With the Reserve Bank of India (RBI) having given a period of 120 days to Centrum Financial Services Ltd (CFSL) to set up a small finance bank, which will eventually take over the troubled Punjab and Maharashtra Cooperative Bank (PMC), the consortium has said that the timeline is “workable” and it hopes to complete the process sooner than that.

Centrum Capital, the holding entity for CFSL, and its partner BharatPe, a payments system company, will infuse Rs 1,800 crore into the small finance bank.

Centrum Capital is the holding entity for CFSL and its partner is BharatPe, a payments system company. RBI last week, had given “in-principle” approval to CFSL to set up a small finance bank.

Talking to NDTV, BharatPe’s Group President Suhail Sameer said, “the timelines are workable and we hope to sort of complete the process sooner.”

Mr Sameer further informed that during the 120-day period while CFSL will set up a small finance bank, the RBI simultaneously will chart out a reconstruction plan for PMC Bank.

“Once we become operational, they (RBI) will take a decision to merge PMC with the small finance bank,” he informed.

Mr Sameer said that for them and the RBI, the interest of the small depositors, who had lost their lives’ savings in the PMC Bank scam, is paramount.

“They have waited for so long, I will ask the depositors to sit tight for some more time and a meaningful outcome will come out of it,” he said.

Elaborating on the process of setting up a small finance bank and meeting the RBI timeline, the BharatPe head said, “we have been communicating with RBI for some time and we are ready and hope to do it sooner. This includes approval from lenders of Centrum to convert its operations into a bank which may take time. Also it requires end audit from RBI for changing operations. However, timelines are workable and we hope to sort of complete the process sooner than later.”

On being asked how does it feel for a newbie digital payments startup like Bharatpe to be on the cusp of becoming half owner of a bank, Mr Sameer said, “It is a great victory for us and a great responsibility.”

He said that the RBI had been watching them and taking note of their performance for quite some time and what the company had achieved in terms of generating payments worth more than billions of dollars in a short span of time, does not happen by fluke.

In addition to this, Mr Sameer said, “in Centrum we have a credible partner and with our combination of conventional lending capabilities and digital capacities, we hope to set up India’s truly digital bank.”

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