Unity Small Finance Bank will pay Rs 3,791.55 crore to about 8.5 lakh depositors of Punjab and Maharashtra Co-operative (PMC) Bank whose life savings had got stuck following a massive corporate fraud.

Depositors say the money is yet to come into their accounts with the bank completing formalities for the payout. 

The payout was  possible after the Deposit Insurance and Credit Guarantee Corporation (DICGC) gave a loan to Unity Small Finance Bank to  settle the claims as per the scheme of amalgamation approved by the Reserve Bank of India (RBI). DICGC settles claims only if it is a case of liquidation. Unity Small Finance Bank will have 20 years to repay DICGC.

“Pursuant to the Government of India notification dated January 25, 2022 regarding the merger of PMC Bank with Unity Small Finance Bank with DICGC support, the main claim of the captioned bank for an amount of Rs 37,91,55,33,367.64 has been settled for 847,506 traceable depositors, as per the list furnished by the bank,” DICGC said in a statement. Now the bank has to make the payout to the retail depositors.

DICGC had asked depositors of the erstwhile PMC Bank (transferor bank) to contact the transferee bank (Unity Small Finance Bank) for receipt of their claim amount.

As of March-end 2021, PMC Bank had deposits aggregating Rs 10,535 crore. Of this, about 70% are retail deposits and the rest are institutional deposits, including other urban co-operative banks (216) and co-operative societies (1,750). These are book entries and the actual cash available is much lower which forced Unity Small finance Bank to take a loan for the first payout.

As per the scheme of amalgamation, PMC Bank depositors above Rs 5 lakh will get their full amount over 10 years from the appointed date. No interest will accrue after March 31, 2021, for a period of five years after the appointed date. Thereafter, simple interest at the rate of 2.75% per annum will be paid at the end of each year for the amounts remaining outstanding.

Unity SFB was born out of the rescue of the tainted PMC Bank whose erstwhile promoters had siphoned off funds, missing their obligations to depositors. Centrum  Group owns 51% of Unity and the remaining is held by  Resilient Innovations Pvt Ltd, the parent of BharatPe.

Unity commenced operations in November 2021 with a capital infusion of Rs 1,100 crore, total assets of about Rs 2,400 crore and an active customer base of over 2 lakh. It was after a gap of six years that RBI was issuing a small finance bank licence to an entity.

In an earlier interview with Indianbankingnews.com, Centrum Group chairman Jaspal Bindra had said: “We are now taking on a huge payout liability. We have to repay Rs 10,800 crore (Rs 8,000 crore for retail depositors and Rs 2,800 crore for institutional depositors) over a certain period of time. We are going to work for the next ten years only to pay off the old depositors. So that is the cost of the licence for us. It is going to be very hard for us.”