Uwb To Seek Depreciation Norm Waiver

The United Western Bank (UWB) has decided to approach the Reserve Bank of India (RBI) to seek waiver of the stipulation requiring it to make adequate provisions for the loss incurred on account of depreciation in the value of the bank's shares held by the Employees Equity Trust.

"The board of directors has taken a decision to approach the RBI with an appeal to reconsider the matter and waive the stipulation of making provisions for the losses," UWB said in a notice to the Bombay Stock Exchange.

The UWB Employees' Equity Trust, as on January 1, 2001, held over 24.32 lakh equity shares, representing about 8.41 per cent of UWB's paid-up capital of Rs 29.88 crore. The trust had purchased a block of 9.51 lakh shares on December 30, 2000, from the secondary market.

 

UWB had advanced loans to the tune of Rs 12 crore to the Employees Equity Trust to finance acquisitions of its own shares in violation of the employees stock options plan (Esop) and share buyback guidelines.

As per the Securities and Exchange Board of India (Sebi) guidelines on the Esop, fresh shares have to be issued for the purpose of Esops and purchases cannot be made from secondary market purchases.

The RBI had earlier directed the UWB management to recall the loan extended to the unregistered trust and liquidate the shares purchased by that trust.

Shareholding in the bank is widely dispersed with Sicom, the state level financial institution, being the single largest shareholder with 9.91 per cent holding.

About 14 shareholders, who the bank believes are acting in concert, collectively hold 10.54 per cent of its share capital. The management holds less than one per cent stake, while the balance is held by the public.