PMC Bank depositors still waiting

Depositors of PMC Bank are still waiting for their hard-money which has been blocked due to restrictions put by RBI under clause 35 A since September, 2019.

The 9 lakh depositors are still not aware about how and when they will be able to get their money back which is stuck in the Punjab and Maharashtra Co-operative Bank (PMC), since Sep 2019.

However, a ray of hope has arrived that post formation of small finance bank (SFB), which will take four months' time from now, the depositors might get their hard-earned money back. There are so many depositors who are under huge financial stress and difficulties that they don't have the money to live their daily livelihood so as to that they have to depend on temples and Gurudwara for their daily food. Also, the dignity of senior citizens is at stake who have kept their entire retired life-long savings in the bank and were living on the interest received out of these deposits from the bank. So much so that how will they survive for next four months is the question to be answered.

Talking to Bizz Buzz, Chander Purswani, President, PMC Depositors Forum, said that there is still no clarity on how and when the depositors would get their money back as amalgamation scheme still needs to be worked out by RBI under Clause 45.

"We are happy that our 21-month long struggle and efforts of depositors has resulted in some positive action finally been taken by the RBI. Still, we need to understand from them_the RBI and Centrum-BharatPe_as how the depositors will get their money back. RBI always says they work in the interest of depositors, I hope all the retail depositors' interest is protected 100 per cent," he added.

Sanya Chhabria, a PMC Bank depositor, said, "We have been waiting for this good news for the last 20 months. Now, we really need to know when we will get our money, whether payments will be spread over two years, three years, whether we will get 100 per cent or not." A new small finance bank — the first to be approved in six years — jointly owned by Centrum Financial Services and BharatPe is all set to rescue the scam-hit PMC Bank. Not to mention that the RBI has recently granted in-principle approval to Centrum Financial Services to set up the small finance bank.

Under the plan, Centrum will first operationalise the SFB in 120 days. Thereafter, the RBI will place in public domain a draft scheme of amalgamation of PMC Bank with Centrum SFB. Mobile payments firm BharatPe will hold 50 per cent in the newly-created SFB. The last step will be the government sanction for the scheme.

Jaspal Bindra, Executive Chairman, Centrum Group, had earlier said that CFSL and BharatPe will commit Rs 900 crore to the SFB in the first year. As and when required, the partners will commit Rs 900 crore in addition to it in future. Interestingly. the minimum paid-up net worth requirement for starting an SFB is merely Rs 200 crore. Once CFSL takes over PMC Bank, it would get a ready-made branch network of about 100 branches in Mumbai and in a few States.

The 'in-principle' approval has been accorded in specific pursuance to CFSL's offer of February 1 in response to the Expression of Interest issued by Mumbai-based PMC Bank, the RBI had said in its statement recently.

As at March-end 2020, PMC Bank had total deposits of Rs10,727.12 crore (Rs11,617.34 crore as at March-end 2019), and total advances of Rs 4,472.78 crore (Rs 8,383.33 crore), as per the bank's FY2019 annual report.

PMC Bank was placed under directions by the RBI from the close of business on September 23, 2019. The RBI took this action as PMC

Bank's financial position deteriorated substantially due to fraud/financial irregularities allegedly perpetrated by a real estate group and certain bank officials and manipulation of its books of accounts. The RBI had capped deposit withdrawal (Rs1 lakh per depositor for the entire period of the directions).

The total AUM of the Centrum group's lending business is around Rs 2,000 crore. This mainly comprises micro-finance and lending to MSMEs. In the nine months ended December 31, 2020, the Centrum Capital's consolidated net loss widened to Rs 36.26 crore against Rs 24.33 crore in the year-ago period.