PMC Bank, Unity Small Finance Bank merger awaits government approval

According to sources, the proposed merger of the debt-ridden Punjab and Maharashtra Cooperative Bank with Unity Small Finance Bank (USFB) is being investigated, and the merger procedure would begin following government clearance. Various parts of the amalgamation proposal have been evaluated, and the government will soon convey any recommendations to the RBI, according to sources. Since all of the essential formalities for the takeover had not been completed, the RBI prolonged the limitations on Punjab and Maharashtra Cooperative (PMC) Bank for another three months, till March 2022.

The drafted scheme of amalgamation must be presented to the government for approval under the Banking Regulation Act, and the Centre may approve the scheme without any alterations or with such modifications as it deems necessary.

According to the Act, the government-approved scheme will take effect on the day specified by them. The Reserve Bank of India (RBI) created a draughts amalgamation proposal, which was made public on November 22 in order to solicit ideas and objections from members, depositors, and other creditors of PMC Bank and Delhi-based USFB. The comments were to be sent by December 10th.

The proposed merger strategy is based on a drawing. According to the RBI, the proposed scheme of merger envisions USFB taking over PMC Bank’s assets and liabilities, including deposits, to provide a stronger level of security for depositors.

USFB was established with a capital of around Rs 1,100 crore, compared to the regulation threshold of Rs 200 crore for the establishment of a small finance bank.

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