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The Supreme Court has upheld the Bombay High Court's order approving the Reserve Bank of India's (RBI) scheme to merge Punjab and Maharashtra Co-operative (PMC) Bank with Unity Small Finance Bank, dismissing petitions challenging the reconstruction plan.
The pleas had contended that depositors with balances exceeding ₹5 lakh would have to wait for up to 10 years to recover their funds under the merger scheme.
Defending the amalgamation, the RBI said that intervention had become necessary after PMC Bank's net worth turned negative by around ₹6,000 crore. The central bank said the lender's financial position warranted regulatory action through a reconstruction scheme.
PMC Bank was placed under RBI directions in 2019 after large-scale financial irregularities and under-reporting of bad loans came to light, triggering restrictions on withdrawals and affecting thousands of depositors.
The RBI subsequently approved a reconstruction scheme under which the bank was amalgamated with Unity Small Finance Bank.
With the ruling, the Supreme Court has upheld the validity of the RBI's reconstruction scheme, allowing the merger with Unity Small Finance Bank to stand.
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The pleas had contended that depositors with balances exceeding ₹5 lakh would have to wait for up to 10 years to recover their funds under the merger scheme.
Defending the amalgamation, the RBI said that intervention had become necessary after PMC Bank's net worth turned negative by around ₹6,000 crore. The central bank said the lender's financial position warranted regulatory action through a reconstruction scheme.
PMC Bank was placed under RBI directions in 2019 after large-scale financial irregularities and under-reporting of bad loans came to light, triggering restrictions on withdrawals and affecting thousands of depositors.
The RBI subsequently approved a reconstruction scheme under which the bank was amalgamated with Unity Small Finance Bank.
With the ruling, the Supreme Court has upheld the validity of the RBI's reconstruction scheme, allowing the merger with Unity Small Finance Bank to stand.
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