Commenting on this state's Chief Secretary B K Patnaik said, "The merger of the two banks will be completed in three to four months and will help to protect deposits of about 13,000 investors.”
Established in 1988, the Bhubaneswar based Urban Co-operative Bank which had been sustaining loss since 2001 had meanwhile become defunct even though the investors had deposited about Rs 28 crore in the bank. The state government's equity assistance of Rs 6 crore to revive the bank in 2007 had also failed, sources said.
Cosmos is a Pune based scheduled bank having its existence in six states like Maharastra, Madhya Pradesh, Andhra Pradesh, Karnataka, Gujarat and Tamil Nadu with 115 branches and 17 lakh depositors.
According to Patnaik, depositors in Urban Co-operative Bank, Bhubaneswar would get back their deposit amount along with interest. Besides protecting the depositors money, Cosmos Bank would also accommodate 32 of the 43 regular employees of Orissa Co-operative Bank, Bhubaneswar. There was no guarantee about the service of other 38 employees of Urban Cooperative Bank.
"The Bank will give priority to former employees of the Urban Co-operative Bank if it undertakes any recruitment in future," Patnaik said. While state government's equity of Rs 6 crore had meanwhile grown to Rs 9 crore, the Urban Cooperative Bank also held bond worth Rs 4 crore besides assets of Rs 1 crore. The bank had unrecovered loan of about Rs 35 crore, sources said. Cosmos officials were unavailable to comment on this development.
In a surprise move, country's largest bank SBI today increased interest rates on select fixed deposits by 0.25 per cent.