Bank of Maharashtra, Corporation in race

Canara Bank may get the nod for United Western.

Bangalore-based Canara Bank may have an edge over others in the race for the troubled Satara-based United Western Bank (UWB).

Several of the banks in contention for buying UWB may not be given a chance by the Reserve Bank of India which is set to follow the "fit and proper" criterion while choosing the likely acquirer and not the highest bidder.

The list of suitors for UWB further expanded today with Pune-based Bank of Maharashtra and Mangalore-based Corporation Bank throwing their hats in the ring. The RBI has asked all those interested in UWB to submit their proposals by tomorrow morning.

Banking sources said bids by foreign banks "" Citibank and Standard Chartered Bank "" are highly unlikely to be considered by the banking regulator.

These two banks are also among the set of banks which have been fined for violation of know your customer (customer identification) norms in the IPO allotment scam. Besides, IDBI is still in the process of integrating IDBI Bank with itself.

"Similarly, Federal Bank is taking over Ganesh Bank of Kurundwad now and cannot be given another bank. Bank of Maharashtra and Allahabad Bank may not be considered as serious contenders," said a source.

The two strongest contenders are Canara Bank and ICICI Bank. "Canara Bank may get the nod as it has a big balance sheet to absorb United Western and it needs larger presence in western India," said a source. ICICI Bank was earlier this year penalised for its involvement in the demat scam.

A banking source said, "another Mumbai-based private bank had approached the RBI when the central bank was looking for a suitor for the failed Ganesh Bank of Kurundwad, but was cold shouldered. The RBI did not respond at all to the private bank's proposal clearly suggesting that the proposal was unwelcome."

M D Mallya, chairman of Bank of Maharashtra, said UWB offers inorganic accretion of 15 lakh retail clients base and it also has a core banking platform and technology that's nearly identical to our bank.

These advantages defeat the overlapping of branches of the two banks, both of which have greater presence in Maharashtra.

The board of Corporation Bank is meeting tomorrow to consider submitting an expression of interest for UWB, which was put under a moratorium on September 2.