The Reserve Bank of India has today placed in public domain a draft scheme of amalgamation of the Ganesh Bank of Kurundwad Limited with the Federal Bank Limited. The Reserve Bank has invited suggestions and comments from members of public, including the banks' shareholders, depositors and creditors on the draft scheme. The draft scheme has also been sent to both the banks. Both the banks have been given two weeks' time, upto January 21, 2006, to consider the draft scheme. The suggestions and comments would be received by both the banks and the Reserve Bank up to Saturday, January 21, 2006. The Reserve Bank will take a view on the future set up of Ganesh Bank soon thereafter.

It may be recalled that the Ganesh Bank of Kurundwad Ltd. was placed under an order of moratorium on January 7, 2006. The order is effective upto April 6, 2006 or an earlier date if alternate arrangements are in place. The Reserve Bank was to decide the future set up of the Ganesh Bank of Kurundwad Ltd. during the period of moratorium. The Ganesh Bank of Kurundwad was taken under moratorium after being given time to arrange for infusion of capital as also to explore other options for its future set up. Due to the continued inability of Ganesh Bank to raise the required capital, the Reserve Bank of India had to exercise the option of compulsory merger available to it under Section 45 of the Banking Regulation Act, 1949.

The Reserve Bank received interest for taking over the Ganesh Bank of Kurundwad Ltd. from the Federal Bank Ltd. The Federal Bank has, among other things, proposed to pay the depositors fully. The Reserve Bank has examined the proposal received from the Federal Bank keeping in view its financial parameters, retail network and synergies as well as strategic advantages. Taking into account the interest of depositors of the Ganesh Bank of Kurundwad Ltd. as well as the bank's strengths and weaknesses, the Reserve Bank has prepared a draft scheme of amalgamation of the Ganesh Bank of Kurundwad Ltd. with the Federal Bank Ltd.