The 39-year-old bank came to an end with the approval of the government for the final merger plan of Punjab and Maharashtra Cooperative Bank (PMC Bank). With effect from Wednesday all the branches of PMC Bank were converted into branches of Unity Small Finance Bank Ltd, ending the last two years of uncertainties regarding the bank’s future.
However, now the question arises that what is the meaning of this merger for the depositors of PMC Bank, who are waiting to get back their money stuck in the bank in the last 2 years. The scheme approved by the government is very similar to the draft scheme. However, there is a slight change in the schedule of refund of money to PMC Bank depositors.
When will the depositors get their money?
According to the scheme, all eligible depositors will get an amount up to Rs 5 lakh under the Deposit Insurance Credit Guarantee Scheme (DIGC) in the first phase of payment. Thereafter, the balance amount will be paid to him gradually over a period of next 10 years. During this, depositors will get an amount ranging from Rs 50,000 to Rs 5.5 lakh in the first year to the fifth year and the remaining amount will be available at the end of the 10th year.
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The good news is that all the depositors will get their money back and this long-standing uncertainty will come to an end. However, the bad news is that the depositors will get their full amount within a period of three to 10 years. This is a very long wait, especially for some elderly depositors of the bank.
What will happen to the interest payment?
The scheme said that after March 31, 2021, no interest will be available on the amount deposited in PMC Bank for the next five years. After five years, simple interest of 2.75 per cent per annum will be paid on the balance amount at the end of each year.
In September 2019, RBI dissolved the board of PMC Bank
The Reserve Bank of India (RBI) in September 2019 dissolved the bank’s board and took control of it after it was found to have huge fraud and financial irregularities in the functioning of PMC Bank. As of March 31, 2019, the bank had disbursed loans of about Rs 8,383 crore to real estate firm HDIL in violation of single-party lending rules, accounting for about 70 per cent of its total loan book. The bank had deposits of Rs 11,600 crore at that time.
During the investigation of loan fraud cases, the police had arrested many including former managing director of PMC Bank, Joy Thomas. After the confirmation of fraud cases, RBI banned the functioning of the bank and barred depositors from withdrawing money from it. After this, RBI was working on the resolution of PMC Bank for the last two years, which has now been completed.
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