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UWB to operate as IDBI from Oct. 3

Special Correspondent

Central Government sanctions amalgamation of the banks

MUMBAI: United Western Bank Ltd (UWB) will operate as Industrial Development Bank of India (IDBI) from October 3 since the Central Government on Saturday sanctioned the scheme of amalgamation of UWB with IDBI.

Upfront payment

Customers, including depositors of UWB, will be able to operate their accounts as customers of IDBI from October 3. IDBI is making the necessary arrangements to ensure that service, as usual, is provided to the customers of UWB, the Reserve Bank of India (RBI) stated in a release.

In accordance with the scheme, IDBI shall make an upfront payment of Rs. 28 in cash in respect of every fully paid-up share to the members of UWB, who were, as on the prescribed date, registered as the holders of shares of the bank, in partial satisfaction of their claim in respect of their interest in such shares.

Further, in terms of the scheme, if any surplus remains after meeting all the liabilities out of the realisation of assets of UWB, the shareholders may receive a pro-rata payment after the prescribed period.

On an application by the RBI, the Central Government on September 2 had placed UWB under moratorium. On September 12, the RBI placed in the public domain a draft scheme of amalgamation of UWB with IDBI. However, on Wednesday last, the board of directors of UWB has submitted to the RBI a series of objections to the draft scheme of amalgamation.

The UWB board, which met on Tuesday last, decided to raise issues of lack of transparency and rationale behind the RBI's proposal and inadequate scope given to UWB to present its own proposals.

"It (merger) is an unfortunate decision and the RBI should have given UWB an opportunity of putting its case for restructuring,'' Mahesh Athavale, a member of the UWB board, said.

Some shareholders and depositors from Satara in Maharashtra have filed a suit at the Mumbai High Court against the moratorium, which is scheduled to be heard on October 5.

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