Federal Bank to acquire Ganesh Bank

Kerala-based Federal Bank on Monday said it was in race to acquire ailing Ganesh Bank of Kurundwad in Maharashtra and has submitted its expression of interest to the Reserve Bank of India.

"We have submitted our Expression of Interest for amalgamation of Ganesh Bank to Reserve Bank of India, and expect the due process to be completed in one month time," Federal Bank chairman and managing director Venugopalan told PTI.

About the amount that Federal Bank would have to shell out to acquire the beleaguered bank, Venugopalan said, "We expect the maximum outflow to be around Rs 10-15 crore (Rs 100-150 million)."

However, RBI would appoint auditors who would evaluate the books of accounts of Kolhapur-based bank, take a view on its total receivables and liabilities before arriving at the final valuation, Venugopalan said.

The amalgamation would allow Federal Bank access the vast agriculture and SME segments of Ganesh Bank of Kurundwad.

The Centre has suspended operations of Ganesh Bank with effect from January 7 following a request from RBI.

The bank's net worth dipped to negative Rs 3.05 crore (Rs 30.5 million) and non-performing assets stood at around 18 per cent as on March 31, 2005.

As per the order of moratorium passed by the Centre, the bank has been allowed to make payments up to Rs 5,000 to depositors.

The moratorium will continue till April 6, 2006, or an earlier date if alternative arrangements are put in place.

The Reserve Bank has said in a statement that it is considering various options, including amalgamation of Ganesh Bank of Kurundwad with any other bank and will finalise the plans in public interest and to protect public deposits in the bank.