Centrum Finance-Bharat Pe set to acquire PMC Bank – Times of India

    0
    72


    MUMBAI: In what could bring relief to thousands of depositors, RBI on Friday granted an in-principle small finance bank licence to Centrum Finance as part of its resolution for the Punjab and Maharashtra Cooperative Bank. Centrum Finance, upon conversion to a small finance bank, will acquire the business of PMC Bank that has been under a RBI moratorium since September 2019.
    A consortium of Mumbai-based NBFC Centrum Finance and fintech Bharat Pe were the bidders who made it till the end although four bidders did look at the books of the failed bank. PMC Bank had collapsed almost overnight after it turned out that the management had colluded with Wadhwans of HDIL to clandestinely provide loans of Rs 6,500 crore or 73% of its total loan book size of Rs 8,880 crore.
    The move would lead to the lifting of restrictions. But it is not yet clear to what extent larger depositors would get their money back. The bank registered a net loss of Rs 6,835 crore for FY20 and had a negative net worth of Rs 5,850 crore. Centrum has been given 120 days to convert its operations into a bank. It is only after this conversion that the government can issue a notification under Section 45 of the RBI Act which providers for amalgamation of two banks. The fate of large depositors, including hundreds of cooperative societies, will be known only once the government notification is finalised.
    A small finance bank is like a regular private commercial bank in most respects except that it cannot give large loans to businesses and must focus only on retail. They have far more headroom to get into new activities when compared to cooperative banks which are largely regional in their business. “The RBI’s in-principle approval is a validation of Centrum’s proven expertise in financial services and BharatPe’s Digital Leadership, both essential for setting up a New Age Bank. Starting with existing capabilities of an NBFC and a Fintech, active and potential customer base, digital reach and technology, should enable the SFB to scale up quickly,” said Centrum and Bharat Pe in a joint statement.

    FacebookTwitterLinkedinEMail





    Source link

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here