curbs on the operations at Punjab and Maharashtra Cooperative (PMC) Bank a week after the central bank had cleared roadblocks for the takeover of the scandal-hit lender.
“It is hereby notified for the information of the public that the validity of the aforesaid directive… has been extended for a further period from July 1 to December 31,” the central bank said.
Last week, it had given preliminary approval to Centrum Financial Services and BharatPe, a digital payment platform, to float a small finance bank to help merge the businesses of the distressed community lender.
This means, PMC Bank will not be able to do usual business until the year end.
In September, 2019 the central bank placed PMC Bank under its directions after a money-laundering charge had come to light. The urban cooperative bank allegedly created fictitious assets of over Rs 6,700 crore in the form of loans, credited to Housing Development Infrastructure Ltd (HDIL), a tainted entity.
Following this RBI had put curbs on its usual businesses suspending the board of the bank. An RBI-appointed administrator took charge to run the bank. Depositors were restricted to withdraw a sum not exceeding Rs 10,000 of the total balance held in every savings bank account or current account or any other deposit account.
The central bank’s objective was to protect depositors’ money while finding a new investor(s) for the failed bank.
There were four bidders for the PMC Bank that ran into trouble in leaving thousands of depositors hanging aggregating Rs. 10,727 crore.
The other bidders include UK’s Liberty Group and two independent business houses from Hyderabad and Mumbai.
In response to the Expression of Interest (EOI) dated November 3, 2020 floated by PMC Bank for its reconstruction, certain proposals were received.
After careful consideration, the proposal from Centrum Financial Services Ltd. (CFSL) along with Resilient Innovation Pvt. Ltd. has been found to be prima facie feasible, RBI said.
“Taking into account the time required for completion of various activities involved in the process, it is considered necessary to extend the aforesaid Directions,” it said.
The “in-principle” approval, obtained on June 18 will be valid for 120 days for Centrum-BharatPe duo to set up a small finance bank.
