BJP wants competitive bids for UWB

As the queue of suitors to take over the United Western Bank (UWB) gets longer, the BJP today demanded that the government should go for competitive bidding to ensure good compensation to 48,000 investors and shareholders. It also demanded that the bank be merged with an experienced and healthy bank only.

In a memorandum to PK Bansal, minister of state for finance, a delegation of BJP leaders led by former MP and convenor of the BJP investors' cell Kirit Somaiya also demanded that experiment with the present management or section of the management be avoided.

They later met Vinod Rai, secretary, banking, with the same demands. Somaiya had on Monday led another BJP delegation to discuss the issue with RBI officials in Mumbai.

Their other demands included strict action against wilful defaulters, protection of all depositors, and justice to small investors while calculating the merger price.

Referring to the second rights issue priced at Rs 24 recently, the Opposition party demanded from the government to call for explanation from the issue runner and authority recommending this figure.

The delegation sought to know whether any discussion had taken place with the Federal Bank prior to the declaration of moratorium.

The BJP expressed "shock" at the declaration of moratorium arguing that the bank was found "healthy and wealthy" just six months back.

"Rights Issue was allowed, sanctioned, supervised and monitored by the RBI and Sebi. The finance ministry also did not object. The Maharashtra government/ Sicom subscribed to the rights issue at Rs 24. For small investors and deposit holders, it is shocking how in a span of five months, a bank with Rs 6,000 crore in deposits is declared defaulter and the RBI declares moratorium," said the memorandum.

Somaiya told Business Standard that the United Western Bank had started recording operating profit. "The major reason behind this moratorium was internal bickering and fighting within the management," he said adding that the bank should now be handed over to an institution with proven banking experience.

Demanding competitive bidding, the party argued that from business angle the bank offers a lucrative proposal- 230 branches including 85 with their own premises, 70 years of experience and very strong presence in western Maharashtra. Somaiya said that the minister told the delegation that he would consider their demands.