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Government Approves PMC Bank Amalgamation Plan with USFBL

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Government approves PMC Bank amalgamation plan

On January 25, 2022, the Reserve Bank of India (RBI) announced the Government of India’s approval for the amalgamation of the Punjab and Maharashtra Co-operative Bank (PMC Bank) with Unity Small Finance Bank limited (USFBL), the 12th SFB of India.

  • The amalgamation came into force from 25th January 2022 and on the same day all the branches of the PMC Bank were allowed to function as the branches of USFBL.
  • RBI has also notified a Scheme for the amalgamation, which envisages takeover of the assets and liabilities of PMC Bank, including deposits, by the USFBL.

Under the Final Amalgamation Scheme:

i.As per the amalgamation scheme, USFBL must transfer the amount received from the Deposit Insurance and Credit Guarantee Corporation (DICGC) to all eligible depositors of PMC Bank as an amount equal to the balance in their deposit accounts up to Rs 5 lakh, within a 90-days.

ii.For depositors more than Rs 5 lakh in deposits, the payout for the additional amount will be divided,

  • Up to Rs 50,000 will be paid over the next 1 year, up to another Rs 50,000 after 2 years, up to another Rs 1 lakh after 3 years, up to Rs 2.5 lakh after 4 years, up to Rs 5.5 lakh after 5 years, and any remaining amount will be paid after 10 years.

iii.No interest shall be payable after March 31, 2021 for the interest-bearing deposits of PMC Bank for a period of 5 years.

  • After that 5 years, simple interest at the rate of 2.75 percent per annum should be paid at the end of each year for the  remaining payable outstanding amounts

iv.For every other liability of PMC Bank, USFBL shall pay only the principal amounts within 5 years in terms of the agreements or terms & conditions agreed between the creditors and the bank.

DICGC’s Support for Amalgamation:

i.In accordance with the provisions of the Deposit and Credit Guarantee Corporation Act, 1961 (Act 47 of 1961), DICGC should pay to USFBL the amount due to the eligible depositors of the PMC bank.

ii.The USFBL will have time up to 20 years from the appointed date, to repay the amount received from DICGC towards payment to the insured depositors, which can be done in one instalment or in several instalments.

Payouts for institutional depositors:

i.The USFBL must use recoveries made from loans given to Housing Development and Infrastructure (HDIL) Group over and above the principal amount to buy back perpetual non-cumulative preference shares (PNCPS) issued to institutional depositors.

  • About 80% of the uninsured deposits outstanding in various accounts should be converted into PNCPS of USFBL with a dividend of 1 percent per annum (payable annually).
  • The remaining 20% will be converted into equity warrants of USFBL at a price of Rs 1 per warrant which shall be converted into shares of USFBL at the time of the initial public offer (IPO).


In October 2021, RBI issued the ‘Small Finance Bank’ (SFB) licence to Centrum-BharatPe’s USFBL to carry on an SFB business in India. Click here to know more

Recent related news:
In December 2021 The Reserve Bank of India issued a prompt corrective action (PCA) framework for Non-Banking Financial Company (NBFCs) to further strengthen the supervisory tools applicable to NBFCs.

About Unity Small Finance Bank Limited (USFBL):

USFBL, a joint venture between Centrum Group and Bharatpe has been set up with capital of about Rs 1,100 crore as against regulatory requirement of Rs 200 crore for setting up a Small Finance Bank (SFB).
Commenced operations – 1st November 2021
Headquarters – New Delhi, Delhi
Chairman – Vinod Rai (Ex-Comptroller & Auditor General)