Finance

RBI issues small finance bank licence to Centrum-BharatPe consortium

Reserve Bank of India (RBI) issued a ‘small finance bank’ licence to the Centrum Group-BharatPe consortium, said Centrum Capital on Tuesday.

Former SBI chairman Rajnish Kumar will be chairman of the BharatPe board. The consortium will take over the assets and liabilities of Punjab and Maharashtra Co-operative Bank.

The new SFB has been incorporated as “Unity Small Finance Bank”. Centrum’s MSME and Micro Finance businesses will be merged into “Unity Small Finance Bank”. Rajnish Kumar completed the term as chairman of country’s largest lender SBI in October 2020. At present, Kumar is also working as advisor (resource raising) to Andhra Pradesh government. He is also an independent non-executive director at HSBC Bank, Asia and L&T Infotech. He will also advice and counsel the management of BharatPe on matters on business performance and corporate governance.

In response to an Expression of Interest (EOI) floated by PMC Bank for its reconstruction in November 2020, certain proposals were received.

After careful consideration, the RBI said, the proposal from Centrum Financial Services along with Resilient Innovation was found to be feasible.

Accordingly, the RBI on June 18, 2021 granted ‘in-principle’ approval to Centrum Financial Services to set up a small finance bank under the general guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector.

PMC Bank had invited EoI from eligible investors for investment/ equity participation for its reconstruction and had received four proposals.

To launch the SFB, the Centrum Group has formed an equal joint venture with Resilient Innovations, an arm of Gurugram-based BharatPe. But Centrum Capital will be the promoter of SFB, under the prevailing laws.

The joint venture will infuse Rs 1,800 crore capital into PMC, Jaspal Bindra, executive chairman of Centrum Group had said.

As of March 31, 2020, PMC Bank’s total deposits stood at Rs 10,727.12 crore and total advances at Rs 4,472.78 crore. Gross NPAs were at Rs 3,518.89 crore at end-March, 2020.

In September 2019, the RBI had superseded the board of PMC Bank and placed it under regulatory restrictions, including cap on withdrawals by customers, after detection of certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL. The restrictions have been extended several times since then.

Initially, the RBI had allowed depositors to withdraw Rs 1,000, which was later raised to Rs 1 lakh per account to mitigate their difficulties.

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