MUMBAI: Bombay High Court dismissed several petitions that challenged a 2022 amalgamation scheme formulated by the Reserve Bank of India of Punjab and Maharashtra Cooperative (PMC) Bank with Unity Small Finance Bank, holding it to be in public interest.
The HC, in the major ruling that came in a petition challenging the Reserve Bank of India (RBI) scheme, observed the amalgamation was in the best interest of depositors as it promises to return all their deposits with interest.
The HC in a March 9 judgment upheld the amalgamation scheme formulated by RBI and sanctioned by the Central govt on Jan 25, 2022 for the controversy-struck PMC Bank, whose financial position turned precarious and a majority of its loan portfolio — 83 percent — was declared non-performing.
The High Court upheld the Scheme in its entirety and Justices Bharati Dangre and Manjusha Deshpande, while dismissing petitions filed by over 225 institutional depositors of the bank, said there was no impropriety, legal or procedural, on the part of the RBI.
“Unity Bank has literally pulled up PMC Bank and its depositors, who faced an acute financial crisis, and has rather offered a fresh breath of air, by securing the interest of the depositors,” the judgment said.
The judgment noted that RBI acted promptly and responsibly to bring about a resolution to ward off liquidation. The RBI, represented by senior counsel Ravi Kadam and leading law firm Shardul Amarchand Mangaldas (SAM), justified the mechanism of an amalgamation to help the distressed bank as a regulator in public interest and the HC found merit in its argument, noting how the scheme would ensure 100% return of principal amounts, with Rs 4,852 crore having been paid to depositors as on Feb 2, 2026. Liquidation, on the other hand, would yield depositors around Rs 5 lakh, whatever their initial deposit.
Krishnamurthy & Co and senior counsel Ashish Kamat for Unity Small Finance Bank Ltd said the scheme by RBI led to growth and safeguarded the banking system and the interests of all classes of depositors – from individual retail depositors to institutional stakeholders.
The HC in a 119-page judgment said, “affidavit placed before us by the Unity Small Finance Bank Limited, its banking activity is placed before us and we find that as on 31/12/2025, 99.45% depositors of the PMC Bank have withdrawn the total amount of Rs 3835.04 crores out of Rs 3856.26 crores, which was released by DICGC.
Apart from this, the Unity Bank has also grown its balance sheet from Rs 11946 crores in March 2023 to Rs 19152 crores in March 2025, and in fact it is also pointed out to us that the Unity Bank is making a profitable business and the profits have increased from Rs 35 crores in March 2023 to Rs 482 crores in March 2025 i.e. its growth rate is 271%.
Apart from this, the bank has expanded its business to 20 States in India and has spread over to 291 branches in place of 110 branches, making it a PAN India Bank, with more and more savings and current accounts being opened.” The HC said it found no reason to dispute the bank’s statement.
