Money & Banking
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Mergers & Acquisitions
RBI facilitates merger of UCBs
Our Bureau
Mumbai
,
Oct. 25
THE Reserve Bank of India, in a bid to smoothen the merger/amalgamation of Urban Cooperative Banks (UCBs), has proposed to permit the acquirer UCB to amortise the losses taken over from the acquired UCB, for a period not in excess of five years. This period includes the year of merger.
The RBI move is expected to facilitate the emergence of strong entities and provide an avenue for non-disruptive exit of unviable units.
RBI also proposes to issue licence to conduct foreign exchange business to those scheduled UCBs that are registered under the Multi-State Cooperative Societies Act, with the State governments concerned assuring regulatory co-ordination by entering into MoU with the apex bank. It is also proposed that scheduled UCBs be extended the currency chest facility. The eligibility norms for these facilities would be notified separately.
Having signed MoU with Andhra Pradesh, Gujarat and Karnataka, RBI is now entering into similar arrangements with other States, with the action plan being drawn up by State-level task forces for the revival of weak UCBs. RBI has begun consultation for the process of revitalising/rehabilitating weak scheduled UCBs, wherein 10 such UCBs are in the process of getting restructured.
RBI has also relaxed the 90-day delinquency norm for certain categories of UCBs. Accordingly, unit banks (single branch) and those with multiple branches within a single district with deposits up to Rs 100 crore would classify their loan accounts as NPAs based on the 180-day delinquency norm. The relaxation would be up to March-end 2007.
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