The Reserve Bank of India (RBI), the central bank of the country, has green lighted a move that will enable Centrum Financial Services to acquire the troubled lender Punjab and Maharashtra Co-operative Bank (PMC Bank).
The RBI granted in-principle approval to Centrum to form a small finance bank (SFB).
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According to local reports, PMC Bank will merge into the SFB after its formation and receipt of necessary regulatory approvals.
In a statement, RBI said: “The RBI would consider granting a licence for commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949, on being satisfied that the applicant has complied with the requisite conditions laid down by RBI as part of ‘in-principle’ approval.”
In 2019, RBI took over the operations of PMC Bank after identifying financial irregularities. The central bank put several curbs on the lender including a cap on daily withdrawals.
Last year, PMC Bank started approaching several lenders for a merger after failing to recover funds.
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By GlobalDataSubsequently, Centrum made an offer to acquire PMC Bank after the latter issued expression of interest in November last year.
Centrum is expected to acquire the struggling lender in a joint venture with digital payment firm BharatPe.
According to an ENS Economic Bureau report, Resilient Innovations, which operates BharatPe, will be an equal partner in the SFB.
