Centrum likely to submit formal offer for PMC Bank next week


Financial services firm Centrum group is exploring the option of placing a formal bid for the troubled Punjab and Maharashtra Cooperative (PMC) Bank next week, after submitting an expression of interest (EoI) along with payments company BharatPe in December.

Centrum chairman Jaspal Bindra told Mint that the group is studying the challenges and capital requirements if it were to make a formal bid.

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“We are not anywhere close to getting the bank. It’s a long shot. It was an opportunity worth considering. We are studying it as we speak. We have to make an offer in a few days. There are two or three issues. The Cooperative Act has issues of its own. One has to understand and deal with that. Then there is the challenge in the financials of the bank. Then there is the long extended moratorium, which has created huge amount of angst in deposit holders,” he said.

Besides the BharatPe-Centrum combine, three other groups have also submitted EoIs to the Reserve Bank of India (RBI) for acquiring PMC. One of these is steel baron Sanjeev Gupta’s Liberty House Group. The names of the other entities are not known yet.

In November, the lender had invited EoIs from external investors after being under moratorium for more than a year.

Bindra said the company was looking to scale its lending business, but availability of liquidity constrained its ability to expand. Centrum Financial Services availed the RBI’s three-month moratorium on debt repayments. Recently, Centrum bought a majority stake in Cental Bank Home Finance for 160 crore. Before that they had acquired the supply chain portfolio of L&T Finance.

“That was the thinking a couple of years ago, that we will build scale first like all non-banking financial companies (NBFCs) have done. However, given what has happened in last 18-24 months particularly in the NBFC sector, we think there are two times to enter a bank. When you are big in scale, it makes sense and when you are reasonably small it also makes sense. Scaling up now is not as easy as two years ago. The liquidity window for NBFCs is far more constrained. There have been lots of accidents in the NBFC sector. So, it’s not a bad time to have a look at it,” said Bindra.

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