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Submit merger plan by May 25: RBI to Mapusa Urban Co-op Bank

Submit merger plan by May 25: RBI to Mapusa Urban Co-op Bank

14 May 2019 No comment 15 hits

Mapusa: The Reserve Bank of India (RBI) has issued an ultimatum to the Mapusa Urban Co-operative Bank to submit a concrete proposal on the merger plan of the bank before May 25 or else said that the central bank will be forced to take action under the Banking Act.

The merger talks have got an in-principle approval and merger conditions are being decided between the Mapusa Urban Co-op Bank and Punjab and Maharashtra Co-op (PMC) Bank.

In March, the RBI had issued show-cause notice to the Mapusa Urban Co-op Bank asking it why no action like cancellation of the bank licence or bank liquidation should not be taken as per Section 22 read with 56 of the Banking Act.

The Mapusa Urban Co-op Bank had sought relaxation for a period of three months on the show cause which was not granted by the RBI and then an ultimatum was issued directing the bank to submit a concrete plan on merger before May 25 or the bank will have to face action as per the Act.   

The management of Mapusa Urban Co-op bank is confident of the merger talks with the PMC Bank, as the talks are about to enter the second phase of discussion. Initially in March, due diligence was carried out by a team of 12 chartered accountants and then around 27 officers attached to the PMC Bank visited the Mapusa Urban Co-op Bank to study and check the bank position on different aspects like staff cost, bank securities, investments and submit a report to the management.

Following this, the first round of meeting between the officials of the two banks was held on May 9 at the PMC bank’s main office in Mumbai.

General manager of Mapusa Urban Co-op Bank Shailendra Sawant said, “They (PMC) have already studied our staff portfolio, depositors portfolio, advances portfolio and investment portfolio and on that basis in principle, have agreed for the merger. There are some hitches regarding staff portfolio so they have said that some condition will be put up for the merger; if we (Mapusa Urban) agree, then the merger can go ahead in the second phase.”

Sawant said that the property valuer of PMC bank Tuesday visited the Mapusa Urban Co-op Bank to value all the assets owned by the bank. “Following their report, conditions for the merger will be drafted in a week’s time to take the next step,” he said.

Source: Submit merger plan by May 25: RBI to Mapusa Urban Co-op Bank

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