Public sector Indian Overseas Bank (IOB) has proposed to take over the Pune-based Shree Suvarna Sahakari Bank Ltd, which is currently under Reserve Bank of India (RBI) moratorium. ?If IOB succeeds in its takeover attempt, this will become the first of its kind transaction between a public sector bank and a cooperative bank,? said SA Bhat, chairman and MD, Indian Overseas Bank.
Speaking to FE here, on Monday, he said that the board has given its in-principle approval for the same. ?We will take a final call once the due-diligence exercise is over and necessary regulatory approval is through. We have moved the RBI in this process.? According to Bhat, the Pune-based cooperative bank has close to dozen branches with a total business of Rs 1,200 crore. ?We expect to complete the process within six months of receiving all necessary regulatory approvals,? he said. ?We are planning to buy out only the assets and liabilities of the bank and the details on the same will be known only after the due diligence gets over,? he added.
?The takeover will give us a strong foothold in the western region, particularly in Pune and Mumbai, where the bank has limited presence,? he said.
On the impact, Bhat said, ?We expect there will be some impact initially, may be 0.4% to 0.5% on CRAR, but on the long-term we stand to benefit immensely. The NPA level of Shree Suvarna Sahakari Bank will be known only later?, he said.
Shree Suvarna Sahakari Bank has 12 branches including nine in Pune, two in Mumbai and one in Shripur. The total employee strength is estimated to be little over 100.