In a major development for the depositors of PMC Bank, RBI has granted “in-principle” approval to Centrum Financial Services Limited to set up a Small Finance Bank, leading to cheers not only among the depositors but also among those co-operators who fought for them over the last two years.
An “in-principle” approval has been accorded in specific pursuance to the Centrum Financial Services Limited’s offer dated February 1, 2021 in response to the Expression of Interest notification dated November 3, 2020 published by the Punjab & Maharashtra Co-operative Bank Ltd., Mumbai”, RBI issued a release in the second half of Friday.
Centrum Financial Services Limited was granted “in-principle” approval under general “Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector” dated December 5, 2019.
“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”, reads the release.
Satish Marathe who takes up the cause of UCBs, being on the RBI Board, thanked the Governor for his imaginative initiative in protecting the interests of PMC depositors. Talking to Indian Cooperative, Marathe said “without the two- RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman, this would have not been possible.”
Though the details of the approval and how the Centrum Financial Services Limited would go about the job is yet to come, Marathe felt small depositors would get back their deposits very soon.
There are two other categories of depositors—bigger ones and the institutional ones. The bigger ones are also likely to get back a part of their deposits while a part of these may be kept in a lock-in period with accruing interest of them, opine some experts.
The institutional investors may be asked to invest in bonds, etc, say experts. Once it is converted into a Small Finance Bank, the process of attracting investment becomes easy and the bank may come back to normal operations in a few years, they add.
Marathe said with this decision the constant charge on RBI that it only helps private banks and not the UCBs would hold no merit. He recalled many brainstorming sessions he held both within the RBI and the Sahakar Bharat for the last two years to come out of the PMC impasse.
The PMC’s “in-principle” resolution also made Marathe nostalgic about Madhavpura Mercantile Bank and how a team worked hard to resolve the crisis. “This is the second time in my 40 years career that we have succeeded gloriously”, he said.