Unity Small Finance Bank has paid out around Rs 3,791.55 crore to 8.5 lakh account holders in Punjab and Maharashtra Cooperative Bank (PMC Bank) — bringing some relief to the depositors who were denied access to their life savings after the bank collapsed in 2019.

In January, the finance minister had sanctioned the amalgamation of PMC Bank with Unity Bank, thus protecting it from liquidation.

Following the amalgamation, PMC Bank’s 110 branches and over 1,100 employees came into Unity Bank’s fold.

The payout was possible after the Deposit Insurance and Credit Guarantee Corporation (DICGC) forked out the money under an insurance mechanism that protects all bank deposits up to a limit of Rs 5 lakh.

Unity Bank is promoted by Centrum Financial Services Ltd with Resilient Innovations Pvt Ltd, the BharatPe parent, as a joint investor.

It commenced operations in November 2021 after the Reserve Bank of India issued a small finance bank licence with a capital infusion of Rs 1,100 crore, total assets of about Rs 2400 crore and an active customer base of over 2 lakh. While Centrum holds 51 per cent in the lender, the rest is held by Resilient Innovations.

Unity Bank will repay the full principal amount due to all PMC Bank depositors as per the scheme of amalgamation.

Under the scheme, the bank will pay up to Rs 5 lakh — the amount insured with the DICGC — to all depositors in the initial phase.

Depositors with savings above Rs 5 lakh will get another Rs 50,000 at the end of the first year.

At the end of two years, Unity will pay an additional Rs 50,000 over the insured amount. This will go up to Rs 1 lakh at the end of three years. The full amount will be paid after 10 years

On the other hand, institutional depositors will receive preference shares (80 per cent) and equity share warrants (20 per cent) in lieu of their eligible deposit balances. The warrants will be converted into equity shares at the time of the Bank’s IPO, giving them a potential equity upside