Government notifies PMC Bank merger with USFB
All branches of the scammed Punjab and Maharashtra Co-operative (PMC) Bank will operate as branches of Unity Small Finance Bank (USFB) from January 25, 2022, according to the Reserve Bank of India (RBI) .
This follows the Indian government’s approval and notification on Tuesday of PMC Bank’s merger plan with USFB. The date set for the merger is January 25, 2022.
However, PMC Bank retail depositors with deposits of more than Rs 5 lakh will be disappointed with the provisions of the scheme.
In their comments on the draft merger plan (published in November 2021), depositors wanted the 10-year period to recover their deposits to be reduced to three years and the payment of the prevailing interest rate on their balances with USFB. These two requests were not accepted in the final scheme.
Chander Purswani, chairman of the PMC Depositors Forum, said the Forum will consider moving the court to seek justice for the depositors, who have struggled over the past 28 months to recover their hard-earned money.
In the schedule for the return of deposits to depositors of PMC Bank, an additional payment has been incorporated. At the end of the first year from the set date, USFB will make an additional payment of up to Rs 50,000 to depositors with balances above Rs 5 lakh.
USFB will initially pay the amount received from the Deposit Insurance and Credit Guarantee Corporation to all eligible depositors of PMC Bank, which would be an amount equal to the balance of their deposit accounts or ₹5 lakh, depending on the amount the lowest.
Under the program, no interest on interest-bearing deposits with PMC Bank will accrue after March 31, 2021 for a period of five years from the date set.
Thereafter, simple interest at the rate of 2.75 per cent per annum will be paid at the end of each year for the outstanding sums payable from the date after five years from the date fixed.
At the end of the 10th year from the date set, USFB will use the “net cash recoveries” of assets belonging to the Housing Development and Infrastructure Ltd (HDIL) group beyond the principal amount of advances to the current group to March 31. , 2021, to redeem non-cumulative perpetual preferred shares, which will be issued to uninsured deposit holders in accordance with the plan. This will be at face value on a pro rata basis.
The government notification referred to the detection of some cases of fraud by HDIL and its group companies in PMC Bank in September 2019. Subsequent inspections revealed the precarious financial situation, including the complete erosion of capital and the substantial erosion of this bank’s deposits.
January 25, 2022