Bharat Pe, Indian QR code-based payment app and Centrum Group, the financial services company have submitted an expression of interest (EoI) to collectively take over the disturbed Punjab and Maharashtra Cooperative (PMC) Bank. They submitted a joint expression of interest (EoI) to the Reserve Bank of India (RBI).
Bharat Pe and Centrum Group have made the submissions to the Reserve Bank of India (RBI) for the acquisition among four groups in consonance to a report. Centrum Group and Bharat Pe will hold equal stakes in the venture. According to the news report Steel baron, Sanjeev Gupta’s Liberty House Group had also submitted an EoI to the RBI. The names of the other contenders are not yet known.
NBFCs (Non-Banking Financial Companies), high-net-worth individuals and corporates were showing interest for the first time in acquiring an urban-cooperative bank (UCB). The RBI extended the curbs on PMC Bank until March 2021, on last Friday. The proposals of potential suitors had likely to be examined at that time. If the acquisition is successful it will boost Bharat Pe’s lending business as they are targeting to build a Rs 5,000 crore loan book in two years.
It was revealed that PMC Bank had a ₹6,500crore hole in its balance sheet in September 2019. This was around 73% of their loan book. The banks’ depositors have been struggling to move on due to the regulatory restrictions due to restrictions on withdrawals by RBI and supersede the banks’ board by appointing an administrator. The BharatPe had grown significantly over the past year which was valued at $500 million and has a user base of over 5 million merchants.
The Mumbai-based Centrum Group will have the core financial services expertise and the Delhi-based startup will bring in its tech capabilities and run PMC Bank as a small finance bank. The move will reduce the cost of capital of Bharat Pe and they want to co-run it as a digital-first bank. The Bharat Pe aims to lend on its own instead of doing it only through its partner NBFC. The RBI is inviting EOIs to run PMC Bank as a small finance bank through their documents.
