Mumbai: The Bombay High Court recently dismissed a batch of petitions challenging the 2022 amalgamation scheme of the Punjab and Maharashtra Cooperative Bank (PMC Bank) with Unity Small Finance Bank, holding that the scheme was in public interest and did not suffer from any legal or procedural infirmity.
A bench of Justices Bharati Dangre and Manjusha Deshpande upheld the scheme formulated by the Reserve Bank of India (RBI) and sanctioned by the Central government on January 25, 2022. The court noted that the move was aimed at protecting depositors of PMC Bank, whose financial position had become precarious, with nearly 83% of its loan portfolio turning non-performing.
Dismissing petitions filed by over 225 institutional depositors, the High Court said it found “no impropriety, legal or procedural” in the decision-making process of the RBI. It emphasised that the regulator had acted promptly and responsibly to resolve the crisis and avoid liquidation of the bank.
Highlighting the benefits of the scheme, the court observed that it ensured the return of 100% of the principal amount to depositors along with permissible interest. In contrast, the court noted that liquidation would have severely limited recoveries, with depositors likely to receive only up to Rs 5 lakh regardless of their total deposits.
“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 119-page judgment said.
The court also relied on data placed on record by Unity Small Finance Bank. It noted that as of December 31, 2025, about 99.45% of PMC Bank depositors had withdrawn Rs 3,835.04 crore out of Rs 3,856.26 crore released by the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Further, the bench took note of the growth of Unity Bank after the amalgamation. Its balance sheet expanded from Rs 11,946 crore in March 2023 to Rs 19,152 crore in March 2025, while profits rose sharply from Rs 35 crore to Rs 482 crore during the same period.
The High Court observed that the bank had also expanded its operations significantly, growing from 110 to 291 branches across 20 states, thereby becoming a pan-India institution.
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Rejecting the petitioners’ challenge, the court said it did not find the scheme to be arbitrary or perverse so as to warrant interference under judicial review. “We do not find any reasons to disrupt the existing scheme of amalgamation… which has done best for the depositors,” the bench said.
The court also clarified that comparisons with schemes in respect of other banks were not relevant, as each case must be assessed on its own facts and circumstances.
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