Sicom bid on weak grounds

IDBI throws in the hat as 7th bidder.

The Maharashtra government may find a roadblock in the Reserve Bank of India (RBI) for using its arm "� State Industrial Investment Corporation of Maharashtra (Sicom) "� to resurrect the troubled private sector United Western Bank (UWB).

Even as the RBI appears to be cold shouldering the state government proposal, a seventh suitor "� Industrial Development Bank of India "� has emerged for the Satara-based bank.

The apex bank is of the view that Sicom should have decided to bring in the capital much earlier. The bank was given three years for financial restructuring and infusion of capital for boosting capital adequacy to the required level.

The bank's capital adequacy had in fact turned negative by the end of 2005-06. Sicom and the state government need not have waited for the bank to be put under a moratorium to consider infusion of additional capital, said banking sources.

The UWB saga took a curious turn on Monday with the Maharashtra government deciding that Sicom will play a pivotal role in preparing a reconstruction scheme.

Sicom is one of the principal shareholders of United Western Bank and has a 10 per cent stake in it. The others who have queued up for UWB include ICICI Bank, Standard Chartered

Bank, Canara Bank, Allahabad Bank, Andhra Bank and Federal Bank.

The board of Sicom, at its meeting yesterday, decided to upfront infuse a total of Rs 300 crore to meet the minimum net worth norm with the support of the state government.

Sicom has said the restructuring would not be limited just to bring in funds. The management of the bank would also be revamped and a long-term business plan would be drawn up.

The Sicom board will meet again in the next few days to consider and finalise a proposal for reconstruction of UWB and the proposed capital infusion.