Bank of Rajasthan (BoR) is expected to commence fiscal 2002-03 with a clean slate as it wipes out its accumulated losses through reserves and profits earned in fiscal 2002.
K M Bhattacharya, managing director, said: "We expect to wipe out our accumulated losses of Rs 125 crore in the current balance sheet (2001-02) and hope to pay dividend in fiscal 2003".
BoR will also merge its wholly owned financial arm, Rajasthan Bank Financial Services Ltd, with the parent bank in its balance sheet.
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"The Reserve Bank of India (RBI) issued us a final warning to merge the balance sheet of BRFSL with the bank," said Bhattacharya.
BRFSL is only engaged in recovery business as its losses stand at Rs 8.37 crore. "We expect to recover Rs 3 crore. The merger will not have much of an impact as we have already provided for the losses," he said. The bank will however, need to get a high court order to permit the merger.
BoR has been allowed by the RBI to use its Rs 80 crore free reserves to set off against the accumulated losses. Part of the profits for fiscal 2002 plus the reserves will help the old generation private sector bank start afresh.
Meanwhile, BoR has signed a memorandum of understanding with Bajaj Allianz General Insurance Company to act as its exclusive corporate agent in Rajasthan, where it has 225 branches.
BoR is short-listing a partner for its sale of life insurance products. "To fight a giant such as the Life Insurance Company of India (LIC), we need to find a player which can match the strength of LIC," said Bhattacharya.
"We are keen to diversify our business income stream to include insurance as revenue from core banking activities is reducing," said the bank's executive director Vinod Juneja.
BoR will also be allowed to sell insurance products of Bajaj Allianz outside the state, but there will not have exclusive rights. The pact signed in Mumbai on Friday is subject to the provincial amendment of the Insurance Act, permitting sales by corporate agents.