- Through this SFB, Centrum will take over crisis-hit Punjab and Maharashtra Cooperative Bank (PMC) as a separate process.
- CFSL will get the license for commencement of banking business under Section 22 (1) of the Banking Regulation (BR) Act, 1949.
About Setting up of SFB by CFSL:
i.For the setting up of SFB, there will be capital infusion of Rs 1,800 crore by CCL, and its partner BharatPe, a trademark of Resilient Innovations Private Limited.
ii.The capital will be infused in two equal installments of Rs 900 crore. First installment will be utilized for business initiation while the second one will be provided next year.
iii.A period of 120 days is provided for its commencement.
iv.Both Centrum and BharatPe will hold 50% share in SFB.
Background of PMC Bank:
In September 2019, PMC Bank was placed under curbs for financial irregularities due to which on November 3, 2020, its administrator floated an Expression of Interest (EoI). CFSL had applied for the same at that time which resulted in approval for amalgamation of PMC Bank by CFSL through the SFB route.
- The PMC Bank scam broke out following the bankruptcy of Housing Development and Infrastructure Limited (HDIL), a single borrower with a 73% stake in PMC’s credit book. In this regard, RBI suspended its board and put a cap on the withdrawal by its customers.
Recent Related News:
RBI cancelled the license of Bhagyodaya Friends Urban Co-operative Bank Limited, Maharashtra in April 2021, as the bank doesn’t have adequate capital to fund its depositors in full and as it did not comply with the various provisions of the BR Act, 1949.
Chief executive officer (CEO)– Ashneer Grover
About Centrum Financial Services Limited:
Managing Director (MD) & CEO– Ranjan Ghosh