PMC Bank will have a new owner in Centrum and BharatPe
BharatPeand Centrumhad formed a consortium last year to take over the PMC bank
- The multi-state cooperative bank had over 16 Lakh account holders, with ₹10,727 crore in deposits
- The PMC Bank has been facing regulatory action, after 73% of its loans turned out to be non-performing
Though the official notification only states Centrum’s approval, it is important to note that three-year-old fintech startup BharatPe and Centrum had formed a consortium last year to take over the PMC bank. The duo had also filed a joint expression of interest (EoI) to RBI, BharatPe’s cofounder Ashneer Grover had previously confirmed.
The PMC Bank has been facing regulatory action and investigations over the alleged irregularities in certain loan accounts. The problem began when 73% of PMC Bank’s loans were found to be non-performing in September 2019. These loans, worth ₹6,500 crore, were issued to a real estate company Housing Development and Infrastructure Ltd (HDIL).
AdvertisementRBI superseded the PMC Bank board the same month, after it found that the bank had allegedly been running fraudulent transactions for several years to lend money to HDIL through fictitious accounts. This was in violation of single-party lending rules. The central bank imposed restrictions on deposit withdrawals.
The multi-state cooperative bank had over 16 lakh depositors, of which 60% account holders had up to ₹10,000 each in their accounts, 78% had up to ₹50,000 each and 84% had up to ₹1 lakh each. The bank had total deposits worth ₹10,727 crore, with total advances of ₹4,472 crore and non-performing assets (NPAs) of ₹3,518 crore.
Founded in 1984, PMC Bank had 137 branches across six states -- Maharashtra (103), Delhi (6), Karnataka (15), Goa (6), Gujarat (5) and Madhya Pradesh (2). It was rated among the top 10 cooperative banks in the country.
The RBI in its ‘in-principle’ approval notice to Centrum said that “the RBI would consider granting a licence for commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949, on being satisfied that the applicant has complied with the requisite conditions laid down by RBI as part of “in-principle” approval.”
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