The Hindu : Kerala / Thiruvananthapuram News : Stop Federal Bank-LKB merger move: Achuthanandan

Online edition of India's National Newspaper
Friday, Oct 28, 2005

Kerala

Kerala - Thiruvananthapuram

Stop Federal Bank-LKB merger move: Achuthanandan

Special Correspondent

Urges Prime Minister to take steps for LKB's takeover by a public sector bank

THIRUVANANTHAPURAM: Leader of the Opposition V. S. Achuthanandan has urged Prime Minister Manmohan Singh to block the merger of the Federal Bank and the Lord Krishna Bank and take steps for the takeover of the latter by a public sector bank.

In a statement on Thursday, Mr. Achuthanandan said the proposed merger between the two banks would not benefit the general public, shareholders or employees of the Lord Krishna Bank and that it would only help cover up the `heavy bleeding' of funds from the bank by the Puri Group, which had gained the control of the bank in 1995. Lord Krishna Bank had been facing a crisis for some time now. After the Puri Group took over the control of the bank, they began making hefty loans to their kith and kin. After sometime, all these loans were classified as non-performing assets. According to latest estimates, the bank had a loss of Rs.24 crores. After the Puri Group took over control of the bank, Rs.100 crores were written off as NPA. Although the Reserve Bank of India (RBI) had a representative on the bank's board for a long time, the RBI had not acted on complaints relating to financial irregularities at the bank. In the past, the Government had stepped in when private banks such as Cochin Bank, Paravur Central Bank, Nedungadi Bank and Global Trust Bank collapsed. This was done in the interest of the shareholders, employees and the general public. The same measure should be adopted in the case of the Lord Krishna Bank as well. He said the Government should plough in some money to support the takeover of the bank by a public sector bank.

Printer friendly page
Send this article to Friends by E-Mail

Kerala