Chennai-based Indian Overseas Bank (IOB) has received approval from the Reserve Bank of India (RBI) to acquire Pune-based Shree Suvarna Sahakari Bank (SSSB).
IOB Chairman and Managing Director S A Bhatt 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. The acquisition process is expected to be completed by April.
The central bank had placed SSSB under moratorium some years ago in the wake of financial irregularities that led to losses of more than Rs 300 crore. Bhatt said that it had taken IOB more than 10 months to secure RBI’s approval to take over the troubled bank after receiving approval from the board of directors in March 2008.
The acquisition was delayed due to the audit ordered by the Registrar of Companies of the Maharastra government, a body that regulates cooperative banks along with RBI.
“The differences in the legal structure of IOB and the cooperative bank has further complicated the process of securing approval,” Bhatt said. IOB comes under the ambit of the central government, while SSSB is governed by the state government.
Meanwhile, the bank has reported a 12 per cent increase in its third quarter net profit at Rs 359.02 crore compared with Rs 319.70 crore for the same period last year. The 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, up 25 per cent. IOB’s operating profit rose by 16 per cent to Rs 534 crore from Rs 458 crore.