MUMBAI: United Western Bank (UWB), which was placed under moratorium by the Reserve Bank of India (RBI) last Saturday, has roped in Housing Development Finance Corporation (HDFC) and Infrastructure Development Finance Corporation (IDFC) to bankroll its revival. The plan, which involves recapitalising UWB to the extent of Rs 350 crore, was submitted to the RBI on Thursday.
With several banks also eyeing UWB, the last word will be with the RBI. But if the state government brings its political clout to bear on the outcome, observers say that the Sicom-HDFC plan has a stronger chance of making it through.
According to the plan, HDFC and IDFC will between them infuse a total of Rs 70 crore, with HDFC likely to provide the major portion of the capital. The balance will come from the State Industrial Investment Corporation of Maharashtra (Sicom) and the Maharashtra government, the two chipping in with Rs 70 crore and Rs 210 crore respectively.
HDFC chairman Deepak Parekh also chairs the board of IDFC and he is likely to have an important role in implementing the revival package of United Western Bank. HDFC had a 1.87% stake in IDFC as on June 30, 2006.
DNA had reported on Tuesday that the Maharashtra government, together with Sicom, which holds 10.2 % in UWB, is likely to take “keen” interest in the reconstruction of the bank which reported a negative net worth in June. “Takeover by another bank will dilute its Maharashtrian character,” state finance minister Jayant Patil had said.
An HDFC official said that the group was approached by Sicom to step in and help with the reconstruction of the beleaguered bank. HDFC will not look to delist the bank post-capital infusion, the official said.
With HDFC throwing its hat in the ring, the race to acquire United Western Bank has got more interesting. ICICI Bank, Citibank, Standard Chartered and IDBI Bank were among the banks which had submitted an expression of interest for the Satara-based bank. Federal bank, Allahabad Bank, Canara Bank, Andhra Bank and Uco Bank had also expressed an interest in the troubled bank.
United Western Bank’s large reach in rural Maharashtra has made it an attractive option for banks looking to expand operations. The bank has 230 branches with zonal offices in Mumbai, Pune, Kolhapur, Jalgaon and Nagpur.
Banks in the race to acquire United Western Bank preferred not to comment on the recent development, saying that the RBI had the sole authority to decide on the fate of United Western bank. RBI officials when contacted refused on divulge any details.
