Mumbai: The Reserve Bank of India (RBI) has detailed a draft scheme for the merger of sick Punjab and Maharashtra Cooperative (PMC) Bank with the newly-formed Unity Small Finance Bank Ltd (USFB), more than two years after PMC was put under restrictions on account of fraud that led to a steep deterioration in the networth of the bank.
According to the scheme, deposits of up to 5 lakh can be claimed by depositors over a period of three to 10 years.
The scheme says depositors can claim up to 50,000 at the end of three years, 1 lakh at the end of four years, 3 lakh at the end of five years and 5.50 lakh at the end 10 years.
It may be recalled that the RBI had doubled the amount depositors can withdraw from PMC Bank to 1 lakh from 50,000 in June 2020, allowing more than 84% of the depositors to withdraw their entire account balance. RBI said the above limits are for depositors over and above the withdrawals already made.
According to this schedule, the entire remaining deposits of PMC Bank depositors will be paid back within 10 years from the date the central government notifies this scheme of amalgamation.
Further, the central bank has clarified that interest on these deposits shall not accrue after March 31, 2021 for five years.
“No further interest will be payable on the interest bearing deposits of transferor bank for a period of five years from the appointed date. Provided further that interest at the rate of 2.75% per annum shall be paid on the retail deposits of the transferor bank (PMC), which shall be remaining outstanding after the said period of five years from the appointed date. This interest will be payable from the date after five years from the appointed date,” RBI said.
According to the scheme, 80% of uninsured institutional deposits will be converted into perpetual non-cumulative preference shares (PNCPS) of Unity SFB with dividend of 1% per annum payable annually.
After 10 years from the appointed date, Unity SFB may consider additional benefits for PNCPS holders either in the form of providing a step-up in coupon rate or a call option, upon receipt of approval from RBI.
The remaining 20% of the institutional deposits will be converted into equity warrants of Unity SFB at a price of `1 per warrant. These equity warrants will further be converted into equity shares of the Unity SFB at the time of the initial public offer when it goes for one.
“In respect of every other liability of the transferor bank (PMC), the transferee bank (Unity) shall pay only the principal amounts, as and when they fall due, to the creditors in terms of the agreements entered between them prior to the appointed date or the terms and conditions agreed upon,” RBI said.
“Our shareholders have committed capital of over `3,000 crore through cash and warrants, which will be utilised to build a strong foundation for the bank, hire the right talent and bring best-in-class technology,” Unity Small Finance Bank said in a statement.
In June, RBI had given an in-principle nod to Unity SFB, a joint venture of Centrum Financial Services and Resilient Innovations that runs BharatPe, to take over PMC.
