*Over 50% PMC depositors have stayed with Unity: Centrum Group’s Bindra | Business Standard News

Clipped from: https://www.business-standard.com/article/companies/over-50-pmc-depositors-have-stayed-with-unity-centrum-group-s-bindra-122042901508_1.html

Unity Small Finance Bank’s first leg of journey is integration: Bindra

Jaspal Bindra

Jaspal Bindra, chairman of Centrum Group

All branches of the beleaguered Punjab and Maharashtra Cooperative (PMC) Bank began functioning as branches of Unity Small Finance Bank from January. Jaspal Bindra, chairman of Centrum Group, which is the promoter of Unity SFB, tells Manojit Saha about the road map of the bank. Edited excerpts:

Now that Unity Small Finance Bank has paid the first tranche to depositors of PMC Bank, which was a priority, what is your medium- to long-term road map for Unity Small Finance Bank?

Unity Small Finance Bank’s first leg of journey is integration. So, we have integrated two businesses of Centrum into the bank. The micro finance and the MSME business was done in November last year. In January, we got approval to transfer the assets and liabilities of PMC Bank into Unity. Soon, we are going to begin the integration of BharatPe liabilities and assets sides into Unity. So, the first phase was to integrate the three phases to Unity.

Once we stabilise that, it’s about growing scale in the business. We want to be predominantly a retail and predominantly digital bank. That is the longer term objective.

Which are the new lines of businesses in terms of credit that you are planning to launch?

We are evaluating several businesses and will do a few products at a time — things where we think we have sufficient competitive advantage to scale. We will start with a few of those to begin with. It will not be a full launch of everything at one time.

While assigning the ratings to Unity, Icra has taken note of the expectation of losses for the bank over the medium term, given the high operating expenses in early stages, the costs on account of the merger with PMC Bank, and incremental credit costs if required. When do you see Unity SFB start making profit?

We think operationally, we will be profitable very quickly. Businesses that are integrated from Centrum are already profitable. Businesses to be integrated from BharatPe are also profitable. Most businesses to be inherited from PMC Bank would be run down to liquidation because they are wholesale businesses. We don’t want to run them in our books.

So, operating-wise we will be profitable, but because of the debt repayment and deposit resolution, we might have to provide for those payments. From that point of view, even though it won’t be a cash loss, but will record in the books of accounts as negative for a few years.

How has been your experience in mobilising deposits?

Of the Rs 4,000-crore payout made, more than Rs 2,000 crore is retained with the bank. So we already have a starting deposit of around Rs 2,000 crore. That might vary over the near term by a few hundred crores, but that is a very good start. We hope to build it from here.

Is there any strategy you are adapting to attract new depositors like offering higher rates on savings products?

As a new entrant, the bank has to be competitive. Over time we hope to generate enough service quality and create good experience among customers and good trust and explore new sources of deposits, to make deposit mobilisation programme successful.

What is your experience of retaining the PMC Bank depositors?

Of the first slot, more than 50 per cent of depositors have stayed with the bank. So far it’s been three weeks since we released the money. We hope the trend does not change too much. First 5-7 days there was a lot of movement, now the movement has plateaued.

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