The reconstruction strategy, according to the first of the two people mentioned earlier, entails the formation of a new organisation in which BharatPe and Centrum Group will each own a 50% share. According to the guy, the new entity will apply to the RBI for a small finance bank licence and will buy PMC Bank’s assets and liabilities on a slump selling basis.
PMC Bank had a deposit base of Rs 10,727 crore and loans worth Rs 4,473 crore as of March 31, 2020, according to the most recent data available.
As part of the restructuring process, both bidders will inject equity into the small finance bank, which will aid in the restart of the banking industry. It was impossible to determine the amount of equity infusion needed.
Outside of the small finance bank, BharatPe’s payments company and lending to small merchants will continue. BharatPe currently provides small-value credit to merchants with whom it does business through on-lending funds obtained from other lenders. However, the resolution plan calls for Centrum Group’s non-bank lending firm, Centrum Financial Services Ltd, to be combined with PMC Bank’s properties. This is to prevent having two separate lending companies under the same roof, according to the source.
According to the most recent financials available on Centrum Group’s website, unpaid loans under Centrum Financial Services totalled Rs 823 crore as of March 2021. Following its acquisition of L&T Financial Services’ supply chain financing sector for Rs 646 crore in the financial year ended March 2019, the company saw a rapid increase in outstanding loans.
PMC Bank’s retail depositors will be able to access their funds as they have in the past. Those with significant deposit bases, on the other hand, would likely face some initial restrictions in order to prevent a bank run, according to the source. Withdrawals of up to Rs 1 lakh per depositor are currently allowed, covering 84 per cent of the bank’s depositors in total
Discussions are still ongoing, and the final plan’s contours can vary.