Thread by @anshgupta64

PMC Bank merged into Unity Small Finance bank.

From Wednesday all PMC branches will become Unity branches and the 39 years old PMC will come to an end.

According to the amalgamation scheme, all eligible depositors(essentially retail depositors) will get Rs 5 lakh under the deposit insurance credit guarantee scheme (DICGC). Any amount left over will be staggered over a period of 10 years.

No interest on any of the deposits will accrue after March 31, 2021 for a period of 5 years. Post that, a simple interest at the rate of 2.75 % per annum will be paid at the end of each year for the amounts outstanding which shall be payable 5 years from the appointed date.

For institutional depositors -

As per the scheme, 80% of the institutional deposits outstanding will be converted into Perpetual Non-Cumulative Preference Shares of Unity with annual dividend of 1 percent.

At the end of the 10th year from the appointed date, Unity Small Finance Bank will use any cash recovered from assets of Housing Development and Infrastructure Limited (HDIL) Group in excess of the advances made to HDIL Group outstanding as on March 31, 2021 to buyback Perps

The uncertainty of PMC Bank depositors has ended on whether they will get their money back after 2 long years. There is a clear assurance (at least to retail investors) now that their money will be returned. But they have a long wait ahead.

And many of the deposits will lose their value due to the long delay in payments which might be worse for senior citizen depositors.

Institution investors may have to take a big hit - the conditions for buyback of Perps are fairly stringent and dividend yield miniscule.