At the end of March 31, 1999 SBL has non-performing assets (NPAs) to the tune of Rs 60.43 crore.

The bank also does not possess any realisable security in most of its NPA accounts. According to a report made by its managing director, SN Kundu, the bank has made a provision for only Rs 1.51 crore against a statutory Rs 57 crore.

Further, every share in the bank, which has gone towards the paid-up capital of the bank, along with savings bank account, current account and any other deposit shall be treated as collection accounts by ubi.

Collection account is a notional account which has to be opened by UBI for the purpose of ascertaining the amount, if any, available for distribution to the members of Sikkim bank after adjustment of assets and liabilities.

For the record, theReserve Bank of India has prepared a draft scheme for the merger of SBL (a privately owned bank) with UBI, a profitable public sector bank.

SBL has been in news for sometime for alleged irregularities in its functioning and mismanagement of funds. In January this year, the RBI had also sacked its previous managing director, Amarnath Mitra Mustafi.

According to the merger scheme which had laid down the modalities to be followed in the exercise, the UBI had the responsibilty to penalise those shareholders who had yet to pay up called-up amounts on the shares held by them.

Such shareholders would be given three months (from the date the scheme is ratified) in which to pay up, along with interest at the rate of 6 per cent for the period of default.

UBI had also been entrusted with the responsibility of enforcing repayment of advances considered not readily realisable and which were considered to be bad or doubtful.

In such cases, UBI had two options--it can enter into a compromise arrangement with thedebtor or write--off the amount altogether or it can dispose off any securities of the debtor transferred to it or any asset taken over by it.

The amounts realised by UBI, through the steps taken above is to be utilised in payment or in making provisions for any contingent liabilities of SBL, the draft scheme says.

The scheme also provides for discharge of liabilities to Sikkim Bank's creditors and depositors.

UBI had to open a separate account in the names of the original holders and credit to each holder "the pro rata share available in respect of each of the accounts out of the assets" of the bank.

Thereafter, the complete list of such depositors would be furnished to the deposit insurance and credit guarantee corporation, which would be responsible for making available the required amounts to the bank for payment.

Out of the total deposit base of Rs 63.72 crore, around Rs 3 crore was in savings and Rs 3.60 in current accounts.