Centre Issues Moratorium Order On Benares Bank
The government on recommendation from the Reserve Bank of India (RBI) has passed an order of moratorium on Benares State Bank Ltd (BSB) under Section 45(2) of the Banking Regulation Act, 1949. Thus, the bank will be permitted only to make payments specified in the moratorium, which will remain in force till April 21.
Meanwhile, Bank of Baroda (BoB) is set to take over the ailing bank with RBI already initiating the amalgamation procedure. In fact, earlier the Centre was in favour of liquidating the bank.
The Centre, acting on a routine RBI report, had directed the central bank to initiate liquidation proceedings. The decision, however, reportedly, was changed in view of the forthcoming assembly elections in Uttar Pradesh.
BoB will gain 105 branches across the country following the merger. BSB will be the second UP-based bank after Bariely Corporation Bank to be merged with BoB.
The RBI had instructed BSB to stop incurring fresh liabilities and also limited the withdrawal from deposit account to Rs 1,000, effective from September 25, 2001. The withdrawal limit, however, was raised to Rs 2,500 on October 13.