Canara Bank refuses to take over Amanath

Canara Bank refuses to take over Amanath

Canara Bank refuses to take over Amanath

The Canara Bank on Friday submitted in the High Court of Karnataka that it wanted to withdraw from its earlier decision to take over the loss-making Amanath Cooperative Bank.

Following the U-turn by the Canara Bank, the High Court ordered the chairman and managing director (CMD) of Canara Bank to be present in person during the next hearing.

During the hearing of petitions for and against the merger of Amanath Cooperative Bank with Canara Bank, the counsel representing the Canara Bank submitted that the bank would suffer a huge financial erosion and had therefore decided against the merger.

The latest audit of Amanath Cooperative Bank’s accounts has revealed that its customers would suffer a loss of 32 pc and not 18 pc as was estimated earlier, if the merger was to be financially viable.

Amanath Cooperative Bank has over 2.20 lakh account holders.

The counsel for the Reserve Bank of India (RBI) too submitted that Canara Bank may face losses if it takes over Amanath Bank’s assets and liabilities to which the bench said they wanted to know the Canara Bank’s stand and ordered the bank’s CMD to be present in person during the next hearing.

Justice Ram Mohan Reddy pulled up the Canara Bank counsel and questioned him why the bank is going back on its earlier stand. He asked why Canara Bank was quiet when the court had ordered for the merger and had not brought its difficulties in regard to the merger to the notice of the court.

The bench directed the counsel representing Amanath Cooperative Bank to submit details of those depositors who have Rs one lakh and less than Rs one lakh funds in their accounts.

The bench also questioned the interest of former Union Minister C K Jaffer Sharief, who had opposed the merger. The bench referred to his affidavit in which he had agreed to deposit Rs 67 crore but has not deposited any money till date in Amanath Cooperative Bank’s account.

The High Court on July 31, 2014, had permitted Canara Bank to take over the specified assets and liabilities of Amanath Cooperative Bank under the conditions set by the RBI.
As per the RBI-approved scheme, Canara Bank was to take over only specified assets and liabilities, including all deposit accounts, but not the ‘doubtful assets.’