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IDBI board to discuss UWB on Sept 21

The board meeting will discuss the Reserve Bank of India's draft scheme for amalgamation of UWB with IDBI.

india Updated: Sep 13, 2006 13:20 IST

IDBI Ltd, which won the race for United Western Bank (UWB) leaving behind 16 players, would hold a board meeting on September 21 to discuss the Reserve Bank of India's (RBI) draft scheme for amalgamation of the under-moratorium UWB with itself.

The board of directors would meet on September 21 to discuss the details of the scheme, a bank source told PTI here on Wednesday.

Notably, the RBI on Tuesday proposed a draft scheme to IDBI Ltd for amalgamating the ailing bank with itself. This came as a setback to the efforts of the government of Maharashtra, which along with Sicom and HDFC Group had proposed a rehabilitation package to ensure continuation of the independent entity status of the Satara-headquartered bank.

As per the draft scheme, IDBI will have to make an upfront payment in cash of Rs 28 per share in respect of every fully paid-up share in UWB to investors as on prescribed date, which will be decided by the government later.

Market sources said IDBI will have to pay Rs 150.50 crore to the UWB shareholders. Payment made to UWB investors will be considered as provision for bad debt, the scheme says.

The books and balance sheets will have to be prepared as on September 2.

IDBI will discharge all payments to creditors and depositors of UWB while the employees will continue in service and will be transferred to IDBI, the scheme says.

Both the banks have been given two weeks' time up to September 27 to consider the draft scheme, after which RBI will take a view on the future set-up of UWB. UWB too is likely to decide the date of its board meeting soon.

First Published: Sep 13, 2006 13:17 IST