Punjab and Maharashtra Cooperative Bank Limited (PMC Bank) merged with Unity Small Finance Bank (Unity SFB) on Tuesday and its branches have begun operating under the Unity SFB tag.
The assets and liabilities of PMC Bank have been taken over by Unity SFB under the provisions of the scheme.
PMC Bank had been in trouble after it was unable to recover loans from real estate company HDIL. These loans made up 70 per cent of the loan book of the bank, which stood at Rs 8,300 crore as of March 2019. The Wadhawan family that runs HDIL is closely related to the Wadhwan family that runs Dewan Housing Finance Limited.
While DHFL was sold off to the Piramal Group after it defaulted on its loans, PMC Bank was taken over by the Reserve Bank of India (RBI). Since banks cannot have high exposure to a single client, loans were extended to HDIL in several fraudulent ways that included taking out loans through fictitious accounts as well.
Depositor money was being used to finance fraudulent lending to HDIL. The promoters of HDIL were connected to Waryam Singh, a former Chairman of PMC Bank, who held shares and a board seat in HDIL.
Depositors had put in a total of Rs 10,727 crore in PMC Bank, while the NPAs alone stood at more than Rs 3,500 crore. It had a negative net-worth of Rs 5,850 crore as of the financial year 2020.
While a large percentage of borrowers could withdraw money from the bank after withdrawal rules were loosened, certain accounts would only be able to withdraw money after…
