RBI paves way for Punjab & Maharashtra Cooperative Bank’s revival
PMC Bank posted a net loss of Rs 6,835 crore in FY20, reporting a negative net worth of Rs 5,850.61 crore as per the bid document. In September 2019, PMC Bank was put under charge of an RBI-appointed administrator after some financial irregularities were detected.
The RBI said on Friday the nod to CFS had been given specifically with regard to the latter’s response to the expression of interest (EoI) from PMC Bank on November 3, 2020.
With the Reserve Bank of India (RBI) having given Centrum Financial Services an in-principle nod to set up a small finance bank (SFB), a solution to the troubles of Punjab & Maharashtra Cooperative (PMC) Bank, seems to be in sight. The RBI said on Friday the nod to CFS had been given specifically with regard to the latter’s response to the expression of interest (EoI) from PMC Bank on November 3, 2020.
CFS and BharatPe had put in a bid to acquire the co-operative lender and the acquisition is expected to go through soon after CFS wins a licence. Should it go through it would be the third lender, in recent times, to be rescued after Yes Bank and Lakshmi Vilas Bank.
PMC Bank posted a net loss of Rs 6,835 crore in FY20, reporting a negative net worth of Rs 5,850.61 crore as per the bid document. In September 2019, PMC Bank was put under charge of an RBI-appointed administrator after some financial irregularities were detected.
The regulator had superseded the board and capped withdrawals by customers. At the time, PMC’s exposure to real estate firm HDIL was over Rs 6,500 crore or 73% of its total loan book of Rs 8,880 crore. HDIL was promoted by Rakesh Wadhawan and his son Sarang Wadhawan and a CBI inquiry was initiated into dealings between PMC and HDIL.
Initially, the RBI had allowed depositors to withdraw Rs 1,000, but that was later raised to Rs 1 lakh per account. At the end of March 2020, PMC’s total deposits were of the order of Rs 10,727.12 crore while the advances were Rs 4,472.78 crore. The gross non-performing assets (NPAs) stood at Rs 3,518.89 crore. The bank’s share capital is Rs 292.94 crore.
PMC had invited eligible investors to revive it and received four responses. RBI governor Shaktikanta Das had confirmed that three investors submitted their final offers for the resolution of the crisis ridden lender. Investors need to bring in the capital to enable the bank to achieve the mandated minimum capital to risk weighted assets ratio (CRAR) of 9%. However, investors may explore the option of restructuring a part of deposit liabilities into capital instruments, the EoI document said.
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