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September 27, 2001
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Money > Business Headlines > Report September 27, 2001 |
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Benares Bank turns insolventBS Banking Bureau The Reserve Bank of India on Tuesday put the Benares State Bank under a directive under Section 335 (A) of the Banking Regulation Act. In effect, the bank's depositors cannot withdraw their deposits in excess of Rs 1,000. According to sources, the bank has turned insolvent with a negative net worth and negative capital adequacy ratio. It has been posting net losses for about four years now. Contacted in the bank's headquarters in Varanasi, the Benares State Bank's general manager and officer-in-charge CAK Goel said: "The RBI move has taken us by surprise. The bank had engaged PricewaterhouseCoopers for working out a restructuring package." Erstwhile takeover tycoon P Rajarathinam holds over 50 per cent stake in the bank. Industry sources said the present crisis has nothing to do with the bank's stock market exposure. "It is a case of insolvency. There has been no taker for the bank even though it has been on the look out for a buyer as the price quoted is too high. The RBI has stepped in to protect the depositors' interest," said a source. The central bank has not yet decided on superseding the board or any other course of action. The bank has been without a chairman for the last few months ever since SG Rajadyaksha completed his tenure. For the year ended March 31, 2000 the bank had deposits of Rs 9.01 billion and advances of Rs 2.35 billion. Subsequently, its credit deposit ratio went up. But the financials for fiscal 2001 are not available. It has over105 branches across the country. The Maharaja of Benares was one of the chief promoters of the bank. In 1964, the Bareilli Bank Ltd with seven branches was merged with The Benares State Bank. It also took over the Lucknow Bank Ltd in 1968. The bank had a negative capital adequacy ratio as on March 31, 2000. The net non performing assets of the bank was at 24.70 per cent. Powered by YOU MAY ALSO WANT TO READ:
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