Shardul Amarchand Mangaldas Represents RBI in Landmark Bombay High Court Ruling Upholding PMC Bank-Unity Bank Amalgamation Scheme
The leading law firm in India, Shardul Amarchand Mangaldas, represented the Reserve Bank of India (RBI) in a landmark judgment dated 9 March 2026, wherein the Hon’ble Bombay High Court dismissed seven writ petitions challenging the scheme of amalgamation (Scheme) of Punjab and Maharashtra Co-operative Bank Ltd. (PMC Bank) with Unity Small Finance Bank Ltd. (Unity Bank), formulated by the RBI under Section 45 of the Banking Regulation Act, 1949 and sanctioned by the Central Government on 25 January 2022.
Court Upholds RBI’s Scheme
The High Court upheld the Scheme in its entirety, finding no legal or procedural impropriety on the part of the RBI. The judgment affirmed that when PMC Bank’s financial position had turned precarious — with a negative net-worth of INR (–) 6,737.61 crore, and approximately 83% of its loan portfolio classified as non-performing — the RBI acted promptly and responsibly by exploring every possible avenue for a non-disruptive resolution before resorting to formulation of the amalgamation scheme as the only viable alternative to liquidation.
Precedent-Setting Judgment
The judgment is precedent-setting as it represents a comprehensive judicial endorsement of the RBI’s approach to non-disruptive resolution of a distressed bank, affirming for the first time in such detail that a regulator may, in the interest of depositors and the public, devise a calibrated amalgamation scheme that prioritises the return of deposits to the maximum number of stakeholders over a pro-rata distribution model otherwise applicable in liquidation.
Key Observations by the Court
The High Court specifically noted that had PMC Bank been put into liquidation, depositors would have received no more than INR 5 lakhs regardless of the size of their deposits, whereas the amalgamation scheme assured 100% return of principal amounts, with a total of INR 4,852.33 crore having been paid to depositors as on 2 February 2026. Unity Small Finance Bank Ltd. itself has demonstrated the success of this resolution, having grown its balance sheet from INR 11,946 crore in March 2023 to INR 19,152 crore in March 2025 with profits rising from INR 35 crore to INR 482 crore and expansion to 291 branches across 20 States. The judgment stands as an authoritative affirmation that the RBI’s economic wisdom and regulatory expertise in safeguarding the banking system and the interests of all classes of depositors — from individual retail depositors to institutional stakeholders — shall not be lightly interfered with by the Courts, thereby reinforcing public confidence in the robustness and fairness of India’s banking resolution framework.
Legal Team
The Shardul Amarchand Mangaldas (SAM) team representing the RBI was led by Ameya Gokhale (Partner) and Rishabh Jaisani (Partner), along with Harit Lakhani (Senior Associate), Richa Bharti (Associate), and Ansh Kumar (Associate). The SAM team briefed Ravi Kadam (Senior Advocate), who argued the matter on behalf of RBI.
Conclusion
This landmark ruling reinforces the judiciary’s trust in the RBI’s regulatory framework and its ability to design effective, non-disruptive resolution mechanisms. It further strengthens depositor confidence and sets a significant precedent for future banking restructurings in India.
Click to know more about Shardul Amarchand Mangaldas
If you have a news or deal publication or would like to collaborate on content, columns, or article publications, connect with the Legal Era News Network Team and email us at [email protected] or call us on +91 8879634922.