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RBI proposes merging Nedungadi Bank with PNB

The Reserve Bank of India said on Thursday it had proposed a scheme for merging the beleaguered private-sector Nedungadi Bank with state-run Punjab National Bank.

"The proposed amalgamation envisages full protection of public deposits. The Reserve Bank will make all efforts to complete the due process for the proposed merger as early as possible," the central bank said in a statement.

Earlier in the month, the central bank placed Nedungadi Bank under a moratorium, saying its owners had allegedly violated central bank norms while lending to stock brokers.

According to the Bombay Stock Exchange's Web site, the owners have about a-31.24 per cent stake in the south-India based bank, while retail investors have a stake of 55.71 per cent. The rest is held by private corporate bodies and institutional investors.

Under the central bank's moratorium, depositors of the bank, which posted a loss of Rs 26.31 million in the second quarter ended September 30, will be permitted to withdraw only Rs 5000 each.

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