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After Pune, UCB now has suitor from Chennai


Reported by Chinmaya Dehury/Edited by Swetaparna Mohanty

Bhubaneswar, Aug 4

The Odisha government has requested the Reserve Bank of India (RBI) to accord approval for take-over of the loss-making Urban Co-operative Bank (UCB), Bhubaneswar by the Chennai-based Government Tele-Communication Employees’ Co-operative Societies Ltd (GTCECS).

GTCECS has proposed to take over the management of the bank for a minimum of 25 years with the approval of RBI.

“GTCECS has come up with a proposal for management take-over of Urban Co-operative Bank, Bhubaneswar along with details of the terms and conditions, future plan of action and strategy for revival of UCB after the takeover,” the Deputy Secretary, Odisha Cooperation department wrote to the RBI Regional Director, Odisha recently.

“Under the terms and conditions of the takeover proposal, the GTCECS has proposed to infuse the requisite funds to make good the shortfall in CRAR and to bring the net worth of the UCB, Bhubaneswar to a positive level. The GTCECS is also willing to take over the assets and liabilities of UCB including the liabilities on account of payment to be made to depositors on as is where is basis,” said the letter.

It is to be noted that the Pune-based Cosmos Co-operative Bank had proposed for the merger of the UCB, Bhubaneswar earlier, which could not take place as the former did not show any interest subsequently.

Established in 1988, the Bhubaneswar based Urban Co-operative Bank, which had been sustaining loss since 2001, has virtually become defunct even though the investors had deposited about Rs 28 crore in the bank.  The state government’s equity assistance of Rs 6 crore given in 2007 had failed to revive the bank, sources said.

Cosmos is a Pune based scheduled bank having its presence in six states – Maharashtra, Madhya Pradesh, Andhra Pradesh, Karnataka, Gujarat and Tamil Nadu – with 115 branches and 17 lakh depositors.

According to sources, depositors in Urban Co-operative Bank, Bhubaneswar would get back their deposit amount along with interest after the takeover.

While the state government’s equity of Rs 6 crore has meanwhile grown to Rs 9 crore, the Urban Cooperative Bank, Bhubaneswar also holds bonds worth Rs 4 crore besides assets of Rs 1 crore. The bank had unrecovered loan of about Rs 35 crore, sources said.