RBI allows Centrum to take over PMC, re-launch it as a small finance bank in joint venture with BharatPe

Diversified financial services player Centrum Group on Friday said it has received an in-principle approval from the Reserve Bank of India (RBI) to take over the troubled cooperative lender PMC Bank and re-launch it as a small finance bank.

Centrum hopes to complete the licence terms and conditions within the next 120 days, and seek RBI's final approval to launch the small finance bank and take over PMC, Centrum Group Executive Chairman Jaspal Bindra said.

The group said it will launch the proposed small finance bank (SFB) as an equal joint venture with digital payments startup BharatPe.

When launched, it will be the first SFB to come up in nearly six years, after the central bank gave licences to 10-odd players in August 2015, and put such bank licensing under the on-tap mode.

Earlier, the banking regulator paved the way for the takeover of the crisis-ridden Punjab & Maharashtra Cooperative Bank (PMC) by granting an in-principle approval to Centrum Financial Services, the NBFC arm of Centrum Group, to set up an SFB.

Centrum Group is primarily into broking, investment banking, wealth management, and travel.

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Following this, late in the evening, Centrum in a statement said its proposed SFB will be in equal partnership with BharatPe's arm Resilient Innovations.

"This in-principle approval has been accorded in specific pursuance to the Centrum Financial Services' offer dated February 1, 2021, in response to the expression of interest notification issued on November 3, 2020, by PMC Bank," the RBI said in a statement.

The PMC Bank had invited the expression of interest (EoI) from eligible investors for investment/ equity participation for its reconstruction and had received four proposals.

The RBI said the approval to Centrum to set up a small finance bank is under the general guidelines for 'on-tap' licensing of small finance banks in the private sector.

"The in-principle approval is a validation of our proven expertise in financial services as well as BharatPe's digital leadership, both essential for setting up a new-age bank," Bindra.

BharatPe co-founder and Chief Executive Officer Ashneer Grover said, "With Centrum as our partner, we are confident that we can create a technology-led SFB serving the payments, investment and credit needs of the under-served, both individuals as well as small businesses."