Financial services firm Centrum Group plans to make a formal bid for the crisis-hit Punjab and Maharashtra Cooperative (PMC) Bank next week. The two-decade old integrated financial services group had submitted an expression of interest (EoI) along with payments company BharatPe in December to collectively take over the Mumbai-headquartered cooperative bank. Both Bharat Pe and Centrum will hold equal stake in PMC Bank if they successfully acquire it.
Centrum Chairman Jaspal Bindra reportedly said that the group is evaluating the challenge in the financials of the bank and capital requirements if it were to make a formal bid. Recently, Centrum Group acquired the supply chain portfolio of L&T Finance and a majority stake in Cental Bank Home Finance for Rs 160 crore.
"We are not anywhere close to getting the bank. It's a long shot. It was an opportunity worth considering. We are studying it as we speak. We have to make an offer in a few days. There are two or three issues. The Cooperative Act has issues of its own. One has to understand and deal with that. Then there is the challenge in the financials of the bank. Then there is the long extended moratorium, which has created huge amount of angst in deposit holders," he told Mint.
BharatPe and Centrum Group are among four groups that have made the submissions to the Reserve Bank of India (RBI) for the acquisition of PMC Bank. Last date for submission of EoIs was December 15, 2020. Steel baron Sanjeev Gupta's Liberty House Group is one of the three other groups that have submitted EoIs to the RBI for acquiring. The names of the other bidders are not known yet.
As per the RBI, the PMC Bank will examine viability and feasibility of these proposals, considering the best interest of the depositors, which would take some more time.
Last year in November, PMC Bank had invited EoIs from external investors for its reconstruction, which has been under RBI moratorium since September 23, 2019. The exercise is meant to find equity investors willing to take over its management in order to revive the beleaguered lender and resume its day-to-day operations.
This is the first time that NBFCs (Non-Banking Financial Companies), corporates, and high-net-worth individuals have shown keenness in acquiring an urban-cooperative bank (UCB).
Recently, the RBI extended moratorium on PMC Bank by three more months until March 31, 2021, keeping in view the best interest of all stakeholders. The directions were last extended on June 19, 2020, up to December 22, 2020. PMC Bank was placed under directions by the RBI on September 29, 2019, after a money laundering scam came to light. The central bank discovered that the lender allegedly created fictitious accounts to hide over Rs 6,700 crore in loans extended to the almost-bankrupt Housing Development Infrastructure Ltd (HDIL). The urban co-operative bank and the RBI have been exploring avenues for its resolution and recovery of bad loans.
By Chitranjan Kumar