Supreme Court Upholds RBI’s PMC Bank–Unity Bank Amalgamation Scheme

Court : Supreme Court of India

Brief :

The Supreme Court, on July 13, 2026, declined to interfere with the Bombay High Court’s judgment upholding the Reserve Bank of India’s scheme for amalgamating Punjab and Maharashtra Co-operative Bank Ltd. (PMC Bank) with Unity Small Finance Bank Ltd.

The petitions were heard by a Bench comprising Justice P.S. Narasimha and Justice Alok Aradhe. The petitioners challenged the staggered repayment mechanism and the classification of retail and institutional depositors under the amalgamation scheme. They alleged violations of Articles 14, 19(1)(g) and 300A of the Constitution.

The petitioners argued that depositors holding more than ₹5 lakh constituted approximately 4.5% of the total depositors but represented nearly 75% of PMC Bank’s aggregate deposits. According to them, requiring these depositors to wait up to ten years for complete repayment adversely affected their interests. They submitted that depositor protection under Section 45 of the Banking Regulation Act, 1949, should be assessed based on the monetary value of deposits rather than merely the number of depositors covered.

The RBI defended the scheme by referring to PMC Bank’s negative net worth of approximately ₹6,000 crore and its severely deteriorated financial position. It submitted that expressions of interest were invited, a draft scheme was placed in the public domain, stakeholder objections were examined, necessary modifications were incorporated and the final proposal was submitted to the Central Government.

The Central Government sanctioned the Punjab and Maharashtra Co-operative Bank Ltd. (Amalgamation with Unity Small Finance Bank Ltd.) Scheme, 2022, on January 25, 2022. The Bombay High Court upheld the scheme on March 9, 2026, after finding that the RBI had acted within its statutory powers and followed the prescribed procedure. CA Sansaar

Citation :

Supreme Court of India, order dated July 13, 2026 — Petitions concerning the Punjab and Maharashtra Co-operative Bank Ltd. (Amalgamation with Unity Small Finance Bank Ltd.) Scheme, 2022; official neutral citation/case number not provided in the available information.

Judgement :

The Supreme Court dismissed the petitions and allowed the Bombay High Court’s judgment validating the amalgamation scheme to remain in force.

The Court observed that judicial review in such matters is confined to determining whether the regulator followed the law and the prescribed decision-making procedure. It does not ordinarily permit courts to reassess the economic merits or suitability of a resolution policy adopted by the RBI.

The Bench noted that schemes framed under Section 45 of the Banking Regulation Act are statutory measures intended to resolve banks facing insolvency or severe financial distress. Such schemes cannot be examined in the same manner as ordinary contractual disputes involving private rights. The Court also noted that liquidation could have been the alternative if the amalgamation had not been implemented.

However, the Supreme Court expressly kept open the legal question concerning the interpretation of the phrase “interest of depositors” under Section 45. It did not conclusively decide whether depositor interests must be evaluated according to the total number of depositors protected or the aggregate monetary value of their deposits. This issue may therefore be considered in an appropriate future case.  CA Sansaar