RBI allows the centrum to set up small finance banks
The RBI has stated that it has given Centrum Financial Services ‘in-principle permission. This was done in order to set up a small finance bank, under the ‘Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector’.
The Reserve Bank of India superseded the Punjab and Maharashtra Cooperative Bank (PMC) board in September 2019. Following the thorough assessment of some anomalies in the financial position, disguising and misreporting loans to the real estate developer HDIL, the RBI placed it under regulatory restrictions, including a cap on customer withdrawals. 
In order to take over the crisis of the Punjab and Maharashtra Cooperative Bank (PMC), the Reserve Bank of India granted the ‘in-principle approval to the Centrum Financial Services to set up a small finance bank.
Centrum Financial Services was one of the applicants for the takeover of the Punjab and Maharashtra Cooperative Bank.
Therefore this ‘in-principle approval was recorded in the special pursuance to the Centrum Financial Services Limited’s Offer dated 1st February 2021. It was in response to the expression of interest notification published by the Punjab and Maharashtra National Bank (PMC) on November 3, 2020.
The exposure of Punjab and Maharashtra National Bank to HDIL ( real estate developer) was over Rs. 65,000 crore or 73% of the total loan book size amounting to Rs. 8,880 crore on September 19, 2019.
To address the many challenges, the Reserve Bank of India enabled depositors to withdraw Rs. 1,000, which was later increased to Rs. 1 lakh per account. The Reserve Bank of India then extended the cooperative bank’s regulatory limits for another six months, until December 22, 2020, in June 2020.
On March 31, 2020, the total deposits of the Punjab and Maharashtra Cooperative Bank stood at Rs. 10,727.12 crore and the total advances were at Rs. 4,472.78 crore. Also, in March-end it was observed that the gross non-performance of the asset of the bank stood at Rs. 3,518.89 crore.
