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RBI Prepares Scheme For PMC, Unity Small Financing Bank Merger

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RBI has actually prepared a draft prepare for PMC Bank's amalgamation with Unity Small Finance BankReserve Bank of India (RBI) on Monday revealed a draft plan for amalgamation of the struggling Punjab and Maharashtra Cooperative Bank (PMC) and Unity Small Finance bank (USFB).

The draft strategy proposes USFB taking control of the assets and liabilities of PMC Bank including deposits, which would supply a greater degree of security to depositors.RBI has looked for recommendations or objections, if any, from depositors, members and financial institutions of PMC Bank along with of USFB on the scheme by December 10, 2021.

After the expiry of the due date, the central bank will take a final get in touch with the matter.The strategy has actually been set up on the central bank's website.The RBI further stated that USFB is being set up with capital of about Rs 1,100 crore as versus a regulatory requirement of Rs 200 crore for establishing of a small finance bank under the guidelines for on-tap licensing of little financing bank in personal sector dated December 5, 2019, with arrangement for additional infusion of capital at a future date after amalgamation .

Maharashtra-based PMC Bank was placed under service limitations with impact from September 23, 2019, on account of fraud, which resulted in steep deterioration in the net worth of the bank.The directions were last extended through a June 25, 2021 regulation up to December 31, 2021.

Provided the financial condition of the PMC Bank and in the absence of proposals for capital infusion, the bank was not viable by itself.

In that event, the only strategy might have been cancellation of its licence and taking it for liquidation, in which depositors would have received payment approximately the insurance coverage ceiling of Rs 5 lakh, the RBI said.Keeping in mind the interest of its depositors, the amalgamation scheme has been revealed, which would offer them security, the central bank stated.




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