India-based merchant payments startup BharatPe and financial services group Centrum are reportedly interested in buying scam-hit Punjab and Maharashtra Cooperative (PMC) Bank.
They have submitted an expression of interest (EOI) to the Reserve Bank of India (RBI), to jointly acquire the troubled lender, the Times of India (TOI) has reported.
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The deal, if successful, will allow BharatPe and Centrum to own equal stakes in the scam-hit bank.
A potential acquisition will strengthen the lending business of BharatPe as it aims to build a loan book worth INR50bn ($677m) in two years, the report added citing sources.
BharatPe will bring its technological expertise, while Centrum will leverage its core financial services network to run PMC as a small finance bank (SFB).
A source said: “They want to co-run it as a digital-first bank. For BharatPe, this will reduce cost of capital. It has been wanting to lend on its own, instead of doing it only through its partner NBFC.”
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By GlobalDataCurrently, BharatPe is providing merchants with loans up to INR1.25bn per month. Merchants use BharatPe to accept digital payments.
The EOIs
In the document inviting EOIs, RBI said that it is open to new investors aiming to run PMC Bank as an SFB.
In total, the central bank has received four EOIs for PMC Bank, and 15 December 2020 was the last date for submission.
Centrum Group is co-promoted by former Standard Chartered senior executive Jaspal Bindra.
Additionally, the British businessman Sanjeev Gupta’s Liberty House Group also submitted an EOI to the RBI, the TOI report added.
The names of the other two bidders are unknown. RBI is expected to study the four proposals for PMC Bank by March 2021.
PMC Bank
The state-run PMC Bank provided INR43.55bn worth loans to the bankrupt real estate developer HDIL, which turned out to be a non-performing asset (NPA).
The lender had allegedly created fictitious accounts to hide these bad loans, the RBI discovered in September last year.
PMC Bank has 137 branches and its depositors base includes many high net-worth (HNI) individuals.
As of March 2020, PMC Bank had INR107.27bn in deposits, INR44.73bn in total advances, and INR35.19bn in NPAs, according to TOI.
