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PMC depositors move SC against final merger plan with Unity SFB

Among other haircut terms, depositors have to wait for 10 years to get back their money if the amount is more than Rs 15 lakh

PMC Bank
Manojit Saha Mumbai
3 min read Last Updated : Jan 27 2022 | 11:46 PM IST
Depositors of Punjab and Maharashtra Cooperative (PMC) Bank are planning to move the Supreme Court against the final merger scheme with Unity SFB, which the government approved on Tuesday.

The final scheme was released on Tuesday with some minor tweaks to the draft scheme, which was announced in November last year. The board scheme was unchanged, which proposed depositors taking steep haircuts as they will have to wait for another 10 years to get back the entire money if the amount is more than Rs 15 lakh. Worse, they will not get any interest rate for nearly six years as interest will stop accruing after March 31, 2021, till five years from the appointed date, which is February 25, 2022. An interest rate of 2.75 per cent will be paid from the end of the five years from the appointed date.
Sahakar Bharati, a group representing cooperative societies and founded by Reserve Bank of India (RBI) board member Satish Marathe, is moving the apex court against the scheme.

“Sahakar Bharati will take the lead along with PMC depositors/associations and will appeal to the Supreme Court to take suo moto cognizance of the hardships PMC depositors are facing on account of long lock-in period of minimum 10 years and ridiculously low rates of Interest ranging from 1% to 2.75%,” the organisation said in a statement.

PMC Bank was put under a moratorium from the last week of September in 2019 after financial irregularities caused a loss of Rs 7,000 crore to the bank. The administrator of the bank invited expressions of interest for the reconstruction of the bank, and the Centrum group — a non-banking finance company — and Resilient Innovation Private Limited (Bharat Pe) was chosen as the joint investor.

Centrum-Bharat Pe then secured a small finance bank licence from the RBI and launched Unity SFB, with which PMC will be merged. The joint investor infused a capital of Rs 1,105 crore in Unity in November. Further, equity warrants of Rs 1.900 crore, to be exercised anytime within a period of eight years by the joint holders have been issued by Unity Small Finance Bank to the promoters to bring further capital.

Sahakar Bharati demanded liquidity support from the Deposit Insurance and Credit Guarantee Cooperation while asking that the lock-in period for the depositors should not be more than five years. Minimum interest of 6 per cent be paid to the depositors during the lock-in period, the organisation said.

According to the amalgamation scheme, the first tranche of PMC depositors’ money that will be paid by Unity SFB is ~5 lakh or the amount equal to the balance in the depositors’ account — whichever is less — ‘in accordance with the Deposit Insurance and Credit Guarantee Corporation rules of distribution of such amounts’.

Topics :PMC Bankcooperative banks

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