PMC Bank Amalgamated with Unity Small Finance Bank
Moneylife Digital Team 25 January 2022
The Indian government on Tuesday notified the amalgamation of Punjab & Maharashtra Co-operative Bank Ltd (PMC Bank) with Unity Small Finance Bank Ltd (USFBL). Following the amalgamation, all branches of PMC Bank will function as branches of USFBL from 25 January 2022, says Reserve Bank of India (RBI) in a statement.
In the statement, RBI says, “The scheme of amalgamation notified today envisages takeover of the assets and liabilities of PMC Bank, including deposits, by the USFBL in terms of the provisions of the scheme. USFBL is making necessary arrangements to implement the provisions of the scheme.”
Last week, RBI had approved the appointment of former Comptroller and Auditor General (CAG) Vinod Rai as independent chairman of USFBL. 
In November last year, RBI had released a draft scheme for the acquisition of PMC Bank by USFBL. “It may be seen that USFB is being set up with capital of about Rs1,100 crore as against a regulatory requirement of Rs200 crore for setting up of a small finance bank under the guidelines for on-tap licensing of small finance bank in private sector dated 5 December 2019, with provision for further infusion of capital at a future date after amalgamation,” RBI had said.
According to the draft scheme, equity warrants of Rs1,900 crore, to be exercised anytime within a period of eight years, have been issued by Unity Small Finance Bank on 1 November 2021 to the promoters to bring further capital.
USFBL is set up with a capital of about Rs1,100 crore against the regulatory requirement of Rs200 crore for setting up such a bank, as per the guidelines for on-tap licensing.
Unity Small Finance Bank, a 51:49 joint venture between Centrum Group and BharatPe, has commenced operations as a small finance bank from 1 November 2021.
The PMC Bank scam broke after Housing Development and Infrastructure Ltd (HDIL), a single borrower which accounted for 73% of PMC’s loan book, went bankrupt. 
HDIL, in collusion with PMC Bank executives, created thousands of fake customer accounts to re-route funds to itself.
Earlier on 24 September 2019, RBI imposed strict restrictions on the Mumbai-based Bank. PMC Bank was also barred from carrying out most of its routine business transactions and depositors were restricted to withdraw only Rs1,000 from their accounts at that time. This limit was raised to Rs1 lakh in June 2020, with which the RBI had said that more than 84% of the depositors of the PMC Bank will be able to withdraw their entire account balance.
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