Chennai-based public sector bank Indian Overseas Bank (IOB) has received approval from the Reserve Bank of India to acquire Pune-based Shree Suvarna Sahakari Bank (SSSB).
S A Bhatt, chairman and managing director, IOB said that the bank has received RBI's approval to acquire all the assets and liabilities of SSSB. The due diligence report for the same will be prepared by the first week of February. After formation of scheme with the administrations by April the acquisition process will be completed.
The RBI, in the wake of financial irregularities that led to losses of over Rs 300 crore, placed SSSB under moratorium some years back. After receiving approval from the board of directors to take over the troubled bank in March 2008, it has taken the bank more than ten months to secure RBI's approval, said Bhatt.
The acquisition was delayed due to the audit ordered by the Registrar of Companies of the Maharastra government, which is a body regulates co-operative banks along with Reserve Bank of India. Apart from that differences in the legal structure of IOB and a co-operative bank also further complicated the process of securing approval for the branches of SSB, said Bhatt.
Meanwhile the bank has reported 12 per cent increase in the net profit during the quarter ended September 30, 2008 to Rs 359.02 crore as compared to Rs 319.70 crore for the same period last year. Bank's total income rose by 25 per cent to Rs 2,643.26 crore from Rs 2104.77 crore. Interest earned increased to Rs 2,427 crore from Rs 1,930 crore, an increase of 25 per cent. IOB's operating profit rose by 16 per cent to Rs 534 crore from Rs 458 crore.
