UWB takes on RBI at HC; hearing to continue today
The beleaguered United Western Bank (UWB) in its affidavit filed at the Bombay High Court on Wednesday vehemently opposed the RBI’s scheme of amalgamating UWB with IDBI.
The bank in its affidavit showed several flaws in the scheme, which it argued were not justifiable.
The High Court would continue the hearing on Thursday on a petition filed by UWB depositors.
UWB submitted that there was no “run of the bank” situation as since the bank has been put under moratorium a paltry Rs 145 crore have been withdrawn by depositors against the total deposits of Rs 5,600 crore.
Besides, if the bank’s position had deteriorated then why in the amalgamation scheme a price of Rs 28 per share was offered against the market price of Rs 19.
The bank has contradicted RBI’s argument that no credible efforts were made to infuse capital to raise the capital adequacy ratio (CAR).
Infact, the bank has stated that any attempt to raise capital requires RBI’s nod and even-though several proposals in this regard were mooted RBI has rejected them without citing any reason for rejection and in some cases not even bothered to reply.
In this context the UWB feels that the RBI quoting the negative CAR, as a threat to the interest of depositors is unjustified. UWB said that RBI through the September 18 letter has conveyed that it regrets to accept the expression of interest filed by UWB. However, the banking regulator has been silent till date on the reconstruction proposal jointly filed by the UWB, the Maharashtra government and Sicom. UWB wanted to know in such scenario how RBI has preferred to go ahead with the amalgamation scheme.
According to UWB, the draft scheme was a copy of the amalgamation schemes drafted by RBI for Global Trust Bank and Ganesh Bank but for the inclusion of a share price of Rs 28.
The bank submitted that when it had sought several clarifications from the RBI on the draft scheme, the RBI in its reply asked UWB to seek a legal opinion.
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