The Reserve Bank of India has today placed in
public domain a draft
scheme of amalgamation of the Ganesh Bank of Kurundwad Limited with the
Federal Bank Limited. The Reserve Bank has invited suggestions and comments
from members of public, including the banks' shareholders, depositors and creditors
on the draft scheme. The draft scheme has also been sent to both the banks.
Both the banks have been given two
weeks' time, upto January 21, 2006, to consider the draft scheme. The suggestions
and comments would be received by both the banks and the Reserve Bank up to
Saturday, January 21, 2006. The Reserve Bank will take a view on the future
set up of Ganesh Bank soon thereafter.
It may be recalled that the Ganesh Bank of Kurundwad
Ltd. was placed under an order of moratorium on January 7, 2006. The order is
effective upto April 6, 2006 or an earlier date if alternate arrangements are
in place. The Reserve Bank was to decide the future set up of the Ganesh Bank
of Kurundwad Ltd. during the period of moratorium. The Ganesh Bank of Kurundwad
was taken under moratorium after being given time to arrange for infusion of
capital as also to explore other options for its future set up. Due to the continued
inability of Ganesh Bank to raise the required capital, the Reserve Bank of
India had to exercise the option of compulsory merger available to it under
Section 45 of the Banking Regulation Act, 1949.
The Reserve Bank received interest for taking
over the Ganesh Bank of Kurundwad Ltd. from the Federal Bank Ltd. The Federal
Bank has, among other things, proposed to pay the depositors fully. The Reserve
Bank has examined the proposal received from the Federal Bank keeping in view
its financial parameters, retail network and synergies as well as strategic
advantages. Taking into account the interest of depositors of the Ganesh Bank
of Kurundwad Ltd. as well as the bank's strengths and weaknesses, the Reserve
Bank has prepared a draft scheme of amalgamation of the Ganesh Bank of Kurundwad
Ltd. with the Federal Bank Ltd.
Alpana Killawala
Chief General Manager
Press Release: 2005-2006/853
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