The Hindu Business Line : Bank rehabilitation

This is with reference to "Vulnerability of small banks" (Business Line, September 3): Centurion Bank Ltd was not merged with another bank — private or public.

Nor did it get any capital infusion or any kind of financial support from the Government of India or the Reserve Bank of India.

This is in contrast to the position of some public sector banks that were supported by the Government.

Under a unique scheme of restructuring, approved by the High Courts of Goa and Karnataka, fresh capital of Rs 219 crore was to be infused in two stages — Rs 154 crore in Stage I and Rs 65 crore in Stage II.

As part of the scheme, the Bangalore branch of Bank Muscat was merged with Centurion Bank (not vice versa).

A new management was brought in by Sabre Capital, which took the lead among the new investors. New capital of Rs 154 crore was infused in January 2004, before the new management took over the bank.

Since then there have been further accretions to the capital and the bank is reportedly expanding and doing well. This is perhaps the only case of a private sector bank being rehabilitated with private capital; it is, in fact, a case for study.

V. Janakiraman, Former Managing Director, SBI and ex-CMD, Centurion Bank Ltd

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