Unity Small Finance Bank begins operations, paving way for merging PMC

Unity Small Finance Bank, the 51:49 joint venture between Centrum Group and payments app Bharatpe, on Monday launched their first branch that will go a long way in resolving the crippled cooperative PMC Bank by merging it with the new entity.

Early evening, the Reserve Bank said Unity SFB began operations with the first branch going operational in the city.

The 12th small finance bank begins operations with over Rs 1,100 crore of equity capital, over 2 lakh customers and an asset base of over Rs 2,400 crore which comes from the existing MSME and MFI credit business of the Centrum Group, Jaspal Bindra, group executive chairman and also the non-executive chairman of Unity Bank, told PTI on Monday.

Unity Bank commenced operations in a record time as it got the final licence only on October 12 from the Reserve Bank, after getting the in-principal approval in June. The licence is also contingent on the Unity Bank taking over the crippled Punjab & Maharashtra Cooperative (PMC) Bank, which was hit by a Rs 7,000 crore loan scam and has been under the RBI administrator since September 2019.

"Technically we are open for business now as our first branch is operational from the Centrum Group headquarters at Kalina. We're happy that we could launch the bank in the auspicious Diwali week and hope to open customer accounts from tomorrow itself," Bindra said.

On the proposed merger of PMC with Unity Bank, Bindra said the regulator has not spoken anything about it yet, because under Section 45 of the Banking Regulation Act, first there has to be an operational bank for the merger/takeover of another bank. So we going operational is the first major step towards merger.

"And even our operational expansion is dependent on the merger scheme that the RBI and the finance ministry will come up with, he said, because though there are 145 Centrum branches available, we don't want to be a branch-led business but primarily a digital bank. But all depends on what and how RBI wants us to take over PMC," Bindra explained.

On asked about the management of the bank, he said the company is yet to get the top team as the opening was done in a hurry. "Currently, I've sent one of my group talents, Inderjit Camotra, as the interim chief executive.

On growth and capital infusion, he said by the fifth year Unity Bank will have Rs 3,000 crore of capital. The promoters will infuse Rs 1,900 crore more into the bank in two tranches--Rs 900 crore by the third year and the remaining Rs 1,000 crore by the fifth year.

"At Rs 1,100 crore capital, we're over-funded almost six times the regulatory requirement of Rs 200 crore. If more growth capital is needed, then we will sell equity. Any way according to RBI norms, we cannot dilute our holdings within the first five years."

The bank is owned 51 per cent by Centrum Capital, the listed entity of the Centrum Group and 49 per cent by Resilient Innovations, the arm Bharatpe set up for its banking foray.

In a statement Bindra thanked the RBI for giving them the approval to commence operations of the bank. His partner and co-founder and managing director of Bharatpe Ashneer Grover chipped in saying they are committed to working tirelessly to build a digital bank and they'll now focus on building tech-first products redefining the way we bank.

Founded in 1997, Centrum Group has diversified fee businesses and a lending platform for institutions and individuals. Institutional services include investment banking, institutional and retail broking, distributing pension funds & mutual funds, wealth management for HNIs and family offices, affordable housing finance.

Bharatpe was co-founded by Ashneer Grover and Shashvat Nakrani in 2018 to help small merchants get finance easily. In 2018, it launched the first UPI interoperable QR code, the first zero MDR payment acceptance service and in 2020, it launched the only zero MDR card acceptance terminals BharatSwipe.