10 highlights
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Bindra wanted to make Centrum a major non-banking financial company, but two events transpired which changed his outlook. The first was the collapse of the IL&FS group and the NBFC crisis in 2018. The second was the collapse of the Punjab and Maharashtra Co-operative Bank, an urban cooperative bank mired in large-scale fraud, in 2019.
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The first event made India’s non-bank leaders rethink their business model. Some looked to apply for either a deposit or banking licence in a bid to avoid liquidity issues or asset-liability risks.
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By December 2020, the Reserve Bank of India invited companies to take over PMC Bank, where deposits had been frozen. This presented Bindra with a great opportunity to buy a defunct bank with a large branch network and customers at a cheap cost. This is when Bindra approached Grover to join him in the bid to take over PMC Bank. Bindra had interacted with Grover on previous occasions as BharatPe was a wealth management client of Centrum.
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By October, Centrum and BharatPe had set up Unity Small Finance Bank, which received a licence to operate from the RBI.
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In November 2021, the RBI issued a draft scheme of amalgamation between Unity and PMC Bank, under which depositors of PMC Bank would get their money back over a period of 3-10 years.
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By acquiring PMC Bank, Centrum would gain access to Rs 10,727 crore worth of deposits, a loan book of Rs 4,472 crore, a 130-branch network and over 200,000 customers. BharatPe, on the other hand, can push its merchants to exclusively use Unity Small Finance Bank for deposits, loans and other financial needs.
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On the face of it, everything seemed to be on the up and up. Dig deeper and there are integration challenges between Centrum, PMC Bank and BharatPe; there is also the immense task of resolving PMC Bank’s fraudulent wholesale loan book and ensuring that the bank’s existing depositors stick with it despite facing years of personal turmoil.
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Ashneer Grover has publicly stated that he wants to be India’s biggest banker and plans to list BharatPe on the stock exchanges at some point. But whether he will play an active executive role at Unity Small Finance Bank or pull strings from behind the curtain remains to be seen.
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Either way, this episode is but a speed breaker in Grover’s journey to become one of India’s top celebrity entrepreneurs. Those extolling the virtues of capitalism, ethics or accountability should remember that Grover is laughing his way to the bank.
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This is the fallout of a 7 January leaked audio, supposedly a phone conversation between Grover, his wife and employees at Kotak Mahindra Bank’s wealth management division. The BharatPe CEO is heard swearing at a Kotak relationship manager about not getting IPO financing and issuing death threats.