Unity SFB says 96% of PMC Bank's depositors will be paid upfront

Post Finance Ministry's approval of the merger of debt-ridden Punjab and Maharashtra Cooperative (PMC) Bank with Unity Small Finance Bank (USFB), the SFB on Thursday stated that 96 per cent of all PMC Bank depositors, who have deposits up to Rs 5 lakh, will be paid upfront. 

It also stated that these depositors can choose to either withdraw or retain this amount with Unity Bank; or make additional deposits, and take advantage of the interest rate up to 7 per cent, being offered on savings accounts.

Additionally, Institutional depositors will receive preference shares (80 per cent) and equity share warrants (20 per cent) in lieu of their eligible deposit balances. The warrants will be converted into equity shares at the time of the Bank’s IPO, giving them a potential equity upside, Unity SFB said in a statement.

It also added that Unity Bank will repay the full principal amount due to all depositors, as per the scheme of amalgamation. 

On 25 January, the central government had approved the proposed merger Punjab and Maharashtra Cooperative (PMC) Bank with Unity Small Finance Bank (USFB).

Also Read: Govt approves merger of PMC Bank with Unity Small Finance Bank with immediate effect

All the branches of the PMC Bank will function as branches of Unity Small Finance Bank Ltd. with effect from this date, January 25, 2022, the Reserve Bank of India (RBI) had further stated. 

The Unity Bank had commenced operations on 1 November, 2021. In September 2019, the RBI had superseded the board of PMC Bank.

"Our shareholders have committed capital of over Rs 3,000 crores through cash and warrants, which will be utilized to build a strong foundation for the Bank, hire the right talent and bring best in class technology to deliver a seamless digital banking experience. We are committed to building new age banking products, catering to a diverse set of customers and businesses," the lender further added.

USFB has been set up with capital of about Rs 1,100 crore as against regulatory requirement of Rs 200 crore for setting up of a small finance bank.

It is to be noted that USFB, a joint venture between Centrum Group and Bharatpe, has commenced operations as a small finance bank with effect from November 1, 2021.