Date:02/03/2007 URL: http://www.thehindubusinessline.com/2007/03/02/stories/2007030203182100.htm

Back Saraswat Bank ready to pump in Rs 50 cr in Suvarna Sahakari Bank

Alka Kshirsagar

Saraswat Bank's director rules out contention for merger

"There is absolutely no move on the part of Saraswat Bank to takeover SSSB. The board has not approved a merger, but has approved interest."

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Pune March 1 The Saraswat Bank has made a conditional offer to the grounded Shree Suvarna Sahakari Bank (SSSB), and is willing to put in Rs 50 crore towards its resuscitation provided the promoters, the Agashe family initiates recoveries amongst other measures and cobbles together Rs 300-350 crore to reduce the losses.

Mr Eknath Thakur, Director, Saraswat Bank and Member of Parliament, side stepped reports that his bank was in contention for a merger. "There is absolutely no move on the part of Saraswat Bank to takeover SSSB. The board has not approved a merger, but has approved interest," he said, speaking to Business Line from New Delhi.

"We have looked at their finances and found Rs 455 crore of non-performing assets," he said, adding that if the promoter family disinvested its assets and put together Rs 300-350 crore, Saraswat Bank would "contribute Rs 50 crore from its own capital."

The good news for the bank's beleaguered customers is that the Agashe family, which has been forced to sell of its own assets, has virtually tied up deals that will infuse Rs 150 crore into the kitty by March end.

A deal to sell an 80-acre plot at Erandwane, Pune, where they own 52 per cent stake is clinched, and will add Rs 130 crore to the pool in a phased manner, a source close to the family confirmed. The sale of another property at Kolhapur is to be finalised by the end of the week, and Rs 35-40 crore is expected from this.

The SSSB whose accumulated losses are around Rs 350 crore has been in a limbo ever since the Reserve Bank of India imposed a moratorium on withdrawals over Rs 1,000 per account on September 14, 2006.

According to Mr Anil Diggikar, commissioner for co-operation and Registered Co-op Societies, Maharashtra, the bank has already initiated recoveries of Rs 73 crore. With Rs 20 crore being disbursed to the Pune District Central Co-operative bank, the current liquidity position stands at Rs 50 crore.

If the expected infusion materialises as expected by March 31, the liquidity will stand at Rs 150-160 crore and accounts can also be standardised. "Reduction of losses will only take place around April or May," Mr Diggikar says. However with the liquidity position improving, we hope to allow higher withdrawals by April 1," he reveals.

The SSSB has 13 branches, including two in Mumbai, and has nearly 1.75 lakh depositors, 70 per cent of whom are senior citizens. The customer base is equally large at 2.5 lakh.