Payout to be Rs 4k cr to return up to Rs 5 lakh to PMC depositors: Centrum

In a Q&A Jaspal Bindra, Chairman of Centrum Group says Unity SFB will take some cash assistance from DICGC to meet the liquidity gap

Following the government approving the scheme of amalgamation of Punjab and Maharashtra Cooperative Bank with Unity Small Finance Bank, the former will start the process of paying the first tranche of deposits, which is up to Rs 5 lakh to the PMC depositors. In an exclusive interview with Business Standard, Jaspal Bindra, Chairman of Centrum Group, which is the promoter of Unity SFB, said by March amount will be credited to the depositors' accounts. Excerpts:

Now that the merger process of PMC Bank and Unity SFB has started with the government approving the amalgamation plan, what would be the process of refunding the first tranche of deposits of PMC Bank, which is up to Rs 5 lakh?

We have to go through the process of getting their KYC [know your customer] established. Once this is established, there are some Deposit Insurance and Credit Guarantee Corporation (DICGC) rules, which we will follow as well. Then we will credit the amount to the accounts.

How much time will it take to credit the money to the PMC depositors' accounts?

Today is like Day 1. So, we are just figuring out with DICGC what the process followed. There are almost 980,000 depositors, it will take some time to get the documentation done. We are also checking with DICGC whether it can be done in a package or it has to be done all in one shot. All of that we are figuring out.

Is there an outer time limit which you can tell us, before which PMC depositors can get the first tranche?

Our estimation is we will do it well within March. We are expediting the process as much as possible. We will be happy if they get it quicker and build a goodwill with them.

What is the liability on Unity SFB if all the depositors withdraw up to Rs 5 lakh?

So the payout will be Rs 4,000 crore. We are taking some cash assistance from DICGC to meet the liquidity gap because the money that is coming from PMC is insufficient to meet Rs 4,000-crore demand. What we are getting from DICGC will be a loan on our books that we will repay.

Is the first tranche of Rs 5 lakh excluding the amount already withdrawn by the depositors during the period when the PMC Bank was under restrictions?

Yes, this is what is due now to them.

There is a total of Rs 10,400 crore that is due to depositors, of which Rs 4,000 is the amount to be given to those who are owed below Rs 5 lakh.

Do you expect some liquidity support from RBI also?

We will look at that. We will take that up separately. But immediately we wanted to be provided for the payout to the depositors. For normal growth and business of the bank, we have to negotiate with RBI separately, that is not a part of the scheme.

What is the medium-term growth plan for Unity SFB?

I think for the next 60 days, the aim is just to integrate PMC. That is a major activity to start with – they have branches, they have employees, their NPAs, collaterals etc. The depositors' resolution itself is the priority for the next 60 days.  Come April, we will be in a better position to give you near- to medium-term projections.

What kind of NPAs will Unity SFB inherit from PMC Bank?

That will be a big number. As I said today is Day 1, we are studying the book, we have to do an audit of the balancesheet now. It will take one month or so to audit the balancesheet, then we can talk about the NPA position. We know it is a large number, but how large is something we will be able to tell you after the audit.

Is there any offer for PMC depositors who wish to continue to be a customer of Unity SFB?

We are offering them opening of savings bank accounts. We will offer 7% interest rate on savings bank deposits to all our new and existing PMC depositors