The Supreme Court dismissed petitions challenging the RBI-sanctioned merger of Punjab and Maharashtra Co-operative (PMC) Bank with Unity Small Finance Bank, upholding the Bombay High Court's March 9, 2026 judgment. The scheme, sanctioned January 25, 2022 under Section 45 of the Banking Regulation Act, followed PMC Bank's 2019 fraud linked to HDIL Group. The Court kept open the legal question of whether 'interest of depositors' under Section 45 means number of depositors or value of deposits.

The PMC Bank case is a landmark intersection of banking regulation, constitutional rights, and judicial review limits. When RBI discovered in September 2019 that PMC Bank had concealed massive exposure to the HDIL Group — creating a negative net worth of nearly ₹6,000 crore — it was compelled to act under Section 45 of the Banking Regulation Act, which empowers the RBI to frame amalgamation schemes for distressed banks, even modifying or reducing depositors' rights in public interest.

The core legal tension here is between two legitimate interests: small depositors (numerically 95.5% of all depositors) whose life savings were at stake, and larger depositors (only 4.5% by number but holding 75% of total deposits by value) forced to wait up to ten years for repayment with no accrued interest. The RBI prioritised the former group, arguing rational classification based on livelihood dependency.

For CLAT PG aspirants, the case raises three critical doctrinal issues: (1) the scope of judicial review over expert regulatory decisions — the Court limited its enquiry to the legality of the decision-making process, not its wisdom; (2) the interpretive question of 'interest of depositors' — a purposive versus literal reading of Section 45; and (3) constitutional validity of depositor classification under Article 14. The Court treated amalgamation schemes as statutory, restitutionary mechanisms distinct from ordinary civil proceedings — a crucial distinction for legal reasoning questions.