The Hindu : RBI notifies Nedungadi-PNB merger scheme

Online edition of India's National Newspaper
Friday, Nov 15, 2002

Business

Business

RBI notifies Nedungadi-PNB merger scheme

By Our Special Correspondent

MUMBAI NOV. 14. The Reserve Bank of India, yesterday, notified the draft scheme for amalgamation of Nedungadi Bank with Punjab National Bank (PNB). However, the RBI has invited suggestions or objections on the draft scheme by November 30. The RBI informed that the draft of the scheme of amalgamation could be obtained from banks by any of their members, depositors or creditors.

It may be recalled that the Reserve Bank had placed Nedungadi Bank under moratorium up to February 1, 2003 earlier this month in the best interest of all depositors, stated an RBI release. It also restricted the depositors of this bank from withdrawing more than Rs. 5,000 during the period of moratorium.

"The proposed amalgamation envisages full protection of the public deposits. The Reserve Bank will make all efforts to complete the due process for the proposed merger as early as possible," stated the RBI. It also stated that the RBI had been receiving several requests from the depositors of Nedungadi Bank to allow them to withdraw their deposits in excess of the limit of Rs. 5,000 for various personal and other reasons. "The Reserve Bank of India will consider such requests on a case to case basis depending on their genuineness. The Chairman of Nedungadi Bank and the Regional Director for Kerala have been issued with necessary instructions in this regard, it added.

Our Delhi Correspondent writes:

The Chairman of Punjab National Bank, S. S. Kohli, today confirmed that the Reserve Bank had asked PNB to consider amalgamation of the Kerala-based Nedungadi Bank. "We have asked for some clarifications," Mr. Kohli told presspersons here today.

The Chairman explained that clarifications relate to assets and liabilities of Nedungadi Bank, the extent of provisioning done on non-performing assets and other finer details that were necessary for the due diligence exercise. PNB, however, wants to take over Nedungadi Bank without taking a hit on its balance sheet.

On PNB's other plans, Mr. Kohli said RBI permission had been sought for opening representative offices in the U.K., China and Dubai. On plans to enter the insurance business, Mr. Kohli said the bank was likely to finalise its partners by this month, he said.

Meanwhile, PNB today tied up with leading information technology company Cisco Systems for networking about 3,870 branches as part of its Rs. 150 crore plan for upgrading its technology.

The tie-up with Cisco for networking would enable the bank to upgrade its technology, reduce transaction costs and improve management information system required to prevent frauds, Mr. Kohli said during the signing of the agreement. He said the bank had earmarked Rs. 150 crores for technology upgradation, of which Rs. 50 crores would be spent on networking in the next 12 months. PNB also has a tie-up with Infosys for banking software.

The pact with Nasdaq-listed Cisco would enable PNB to offer `multi-model delivery services' to customers in 150-200 of its branches by the end of this year, Mr. Kohli said. Once 150-200 branches were interconnected by March 2003, the next phase of connecting 500 branches would be taken up in the next six months and by 2005, the bank would have 1,500-2,000 interconnected branches.

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