Centrum to takeover PMC Bank, companion BharatPe to launch SFB

The Reserve Bank of India (RBI) on Friday granted “in-principle” approval to Centrum Financial Services Ltd to arrange a small finance financial institution (SFB), paving the best way for it to take over the scam-ridden Punjab and Maharashtra Co-operative Bank in a three way partnership with digital cost agency BharatPe.
The RBI in an announcement mentioned an in-principle approval was given after Centrum Financial Services submitted an expression of curiosity for PMC Bank. “The RBI would consider granting a licence for commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949, on being satisfied that the applicant has complied with the requisite conditions laid down by RBI as part of in-principle approval,” it mentioned.
Resilient Innovations Private Limited (BharatPe), one in every of India’s main fintech firms, might be an equal companion within the SFB. “Starting off with existing capabilities of an NBFC and a fintech, active and potential customer base, digital reach and technology, should enable the SFB to scale up quickly,” Centrum mentioned.
Jaspal Bindra, government chairman, Centrum Group, mentioned: “We are delighted that a new banking license will be issued to an NBFC after a gap of nearly 6 years and would like to thank the RBI for the opportunity and confidence shown in us. We are excited to partner with BharatPe to create this new age bank, with a strong team.”
“We are delighted at the opportunity to build a high performing technology led small finance bank serving the payment, investment and credit needs of the under-served,” mentioned Ashneer Grover, CEO and co-founder, BharatPe.
As of March 2020, PMC Bank had a deposit base of Rs 10,727 crore and loans value Rs 4,473 crore. The share capital of the financial institution is Rs 292.94 crore. However, the financial institution registered a internet lack of Rs 6,835 crore throughout 2019-20 and has a adverse internet value of Rs 5,850.61 crore.
PMC Bank is below regulatory restrictions after the RBI discovered monetary irregularities in its functioning, hiding and classification of loans given to Housing Development Infrastructure Ltd (HDIL). The financial institution has an publicity of over Rs 6,200 crore to HDIL. The RBI has outdated the board of the financial institution and appointed an administrator in September 2019.
Last yr in November, the financial institution got here out with an EoI (expression of curiosity) to determine an acceptable fairness investor/ group of buyers keen to take over administration management in order to revive the financial institution and start its day-to-day operations. BharatPe and Centrum Group reportedly submitted a joint EoI to the RBI to collectively take over the troubled PMC Bank.

Four bidders had submitted EoIs for the takeover of PMC Bank.
When the RBI sacked the board of PMC Bank, it initially slapped a deposit withdrawal restriction of Rs 1,000 per account which was later elevated to Rs 50,000. About 78 per cent of the depositors have since been allowed to withdraw their deposits throughout the withdrawal restrict of Rs 50,000. While this restrict was additional enhanced to Rs 1 lakh in June final yr, many depositors who’ve greater quantities parked within the financial institution are nonetheless not capable of get their a reimbursement. “We hope to get back our money stuck in PMC Bank with the Centrum takeover,” mentioned a depositor.
In 2019, the Economic Offences Wing (EOW) of Mumbai police arrested PMC Bank’s former managing director Joy Thomas in reference to the fraud on the financial institution. The promoters of HDIL, Rakesh Wadhawan and Sarang Wadhawan, too, have been arrested and are at the moment in jail, dealing with cash laundering expenses.

Incidentally, the net-worth of all SFBs at the moment in operation is in extra of Rs 200 crore.
Centrum was based by Chandir Gidwani and the late Khushrooh Byramjee. Founded in 1997, the Centrum group has diversified charge companies and a lending platform for establishments and people. Institutional companies embrace funding banking, mid-corporates and SME credit score and broking. It additionally supplies MSME credit score, wealth administration to the wealthy and household workplaces, inexpensive housing, and micro finance. It additionally presents funds throughout non-public debt and enterprise capital by its asset administration enterprise.
BharatPe, based in late-2018, presents a finance platform to small retailers. In the identical yr 2018, it launched the primary UPI interoperable QR code, first zero MDR cost acceptance service, and first UPI payment-backed service provider money advance service.