With the Reserve Bank of India (RBI) giving an “in-priciple” approval to Centrum Financial Services for setting up a small finance bank (SFB), both Centrum and BharatPe are ready to take over the crisis-ridden Punjab & Maharashtra Co-Operative (PMC) Bank as equal partners.
The RBI on 18 June gave an in-principle approval to Centrum Financial Services Ltd (Centrum), the established NBFC arm of the Centrum Group, to establish a SFB. Resilient Innovations Private Ltd (BharatPe), a fintech major, will be an equal partner, said a joint statement by both the companies.
It said that the SFB will be guided by the directions and timelines of the RBI on the amalgamation of Punjab & Maharashtra Co-Operative Bank Ltd.
Centrum Group Executive Chairman Jaspal Bindra said: “We are delighted that a new banking license will be issued to a NBFC after a gap of nearly six years and would like to thank the RBI for the opportunity and confidence shown in us. We are excited to partner with BharatPe to create this new age bank, with a strong team.”
BharatPe CEO and Co-Founder, Ashneer Grover, said: “We are delighted at the opportunity to build a high performing technology-led small finance bank serving the payment, investment and credit needs of the under-served. With Centrum as our partner, we are confident that we can create a world-class institution that provides a differentiated and superlative experience to retail customers as well as small businesses.”
The RBI, in a statment on 18 June, said that it will 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 it as part of “in principle” approval.
In March, the RBI had further extended the restrictions on the PMC Bank till 30 June. The central bank had then said that the process of reconstruction will be commenced as soon as the aforesaid objectives are achieved to the best possible extent.
The PMC Bank had received binding offers from certain investors for its reconstruction, in response to the EOI dated 3 November 2020 floated by the bank.
The RBI and the PMC Bank are presently engaging with prospective investors in order to secure best possible terms for the depositors and other stakeholders while ensuring long term viability of the reconstructed entity, the RBI had said in March, adding that given the financial condition of the PMC Bank, the process is complex and is likely to take some more time.