Light at the end of the tunnel for PMC depositors?

‘The money is readily available to the depositors.’

Unity Small Finance Bank, a 51:49 joint venture between the Centrum Group and Bharat Pe, which took over the beleaguered Punjab and Maharashtra Cooperative (PMC) Bank, has credited PMC Bank depositors with Rs 3,800 crore (Rs 38 billion).

This is more than two years after PMC went bust and the Reserve Bank of India imposed restrictions on the amount the depositors can withdraw.

Jaspal Bindra, executive chairman, Centrum Group, tells Subrata Panda/Business Standard how the bank plans to fund the additional amount it has to pay to PMC depositors, going forward.

Has Unity SFB paid around Rs 3,800 crore to 850,000 PMC Bank depositors?

Yes, we have credited the money to various accounts.

The Deposit Insurance and Credit Guarantee Corporation (DICGC) had to certify and confirm who are eligible to be paid upto Rs 5 lakh.

It gave us the certification in late afternoon, about 4:30 pm, and around 5 pm we had credited all the accounts of depositors it listed.

The bank has taken a loan from the DICGC for paying the depositors. By when will it repay the loan?

Yes, for the funding of the amount that has been credited, we have taken cash assistance from DICGC, so that we can fund it immediately rather than wait for deposits or borrowing.

We can repay it in one or more tranches over the next 20 years.

We have the option to pay the amount at the end of 20 years in one bullet payment.

If we have the comfort in paying it earlier, we will, of course, consider that.

How do you plan to fund the rest of the amount that needs to be paid to PMC depositors?

We are obligated to pay them in accordance with the scheme at frequent intervals. We will adhere to the scheme.

We have liquidity, capital, equity and we can raise further equity.

We have commitment of another Rs 1,900 crore of equity raise.

We have to pay the depositors in installments over the years.

In each year, the payout is less than Rs 1,000 crore (Rs 10 billion). So, we should be able to comfortably manage that.

Hopefully, we will have deposit growth as well. But we also have to grow our business, and so, we have to keep the repayment as well as the growth in mind.

Unity SFB has started operations. What will be the focus areas for the bank?

Immediately, the focus area was what we did.

To be able to transfer to 850,000 accounts in a matter of minutes an amount of Rs 3,800 crore involved a lot of homework.

We did not want the process to be delayed for even 15-20 minutes as these people have been deprived access to their money for over three years.

Everybody has got their cheque books and have got credit confirmation on their Unity mobile app.

So, the money is readily available to the depositors. It’s not that they have just been given comfort that the money is now there.

So, this is what we were working on. We will continue to grow our microfinance, small and medium enterprises business, and supply chain business that we have transferred to the bank.

So, traditional businesses will continue to grow. Now, we will enter two lines of business. We are also working on the technology platform.

Can you name the two lines of business that you plan to enter into?

We are in the process of recommending it to the board. It’s a work in progress. So, I can’t share details.

You had mentioned that you want to exit the wholesale business that PMC Bank was in. Any development on this front?

The book will be run down to maturity or settlement. We have no intentions of initiating a wholesale business in Unity Bank.

How do you want to position Unity SFB in the banking space?

It will be an almost 100 per cent retail bank. There will be no element of wholesale banking.

Feature Presentation: Rajesh Alva/Rediff.com

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