Reserve Bank issues draft scheme for takeover of PMC Bank by USFB

Mumbai: The Reserve Bank on Monday came up with a draft scheme for the acquisition of Punjab and Maharashtra Cooperative (PMC) Bank by Delhi-based Unity Small Finance Bank (USFB).

The draft scheme of amalgamation envisages the takeover of the assets and liabilities of PMC Bank, including deposits, by the USFB, thus giving a greater degree of protection for the depositors, the Reserve Bank of

India said.

The USFB is being set up with a capital of about Rs 1,100 crore as against the regulatory requirement of Rs 200 crore for the setting up of such a bank, as per the guidelines for on-tap licensing.

The Reserve Bank said it would receive suggestions and objections on the draft scheme till 5.00 pm on December 10. Thereafter, it will take a final view on the takeover.

It is to be noted that Unity Small Finance Bank Limited, a joint venture between Centrum Group and Bharatpe, has commenced operations as a small finance bank with effect from November 1, 2021.

Moreover, the RBI cautioned the public against co-operative societies using 'bank' in their names as well as accepting deposits from people who are not their

members.

After the amendment in the Banking Regulation Act, 1949, effective September 29, 2020, co-operative societies cannot use the words "bank", "banker" or "banking" as part of their names, except as permitted under the provisions or by the Reserve Bank of India (RBI).

In a statement, RBI said it has come to notice that some cooperative societies are using the word 'bank' in their names in violation of the Banking Regulation Act.

It has also come to the notice of RBI that some co-operative societies are accepting deposits from non-members/ nominal members/ associate members which is tantamount to conducting banking business in violation of the provisions.

"Members of the public are hereby informed that such societies have neither been issued any licence under BR Act, 1949 nor are they authorised by the RBI for doing banking business,"

RBI said.

Further, the insurance cover from Deposit Insurance and Credit Guarantee Corporation (DICGC) is also not available for deposits placed with these societies.

Members of the public are advised to exercise caution and carry out due diligence of such co-operative societies if they claim to be a bank, and look for banking license issued by RBI before dealing with them, the central

bank said.