Recapitalisation of Utkal Grameen Bank on cards

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Recapitalisation of Utkal Grameen Bank on cards

Monday, 11 February 2019 | PNS | BHUBANESWAR

The Union Government has agreed to help out Utkal Grameen Bank (UGB), which is facing tough time due financial strain.

The bank operates in 17 districts of western and southern Odisha like Balangir, Subarnapur, Bargarh, Sambalpur, Deogarh, Jharsuguda, Sundargarh, Kalahandi, Nuapada, Kandhamal, Boudh, Ganjam, Gajapati, Koraput, Malkangiri, Rayagada and Nabarangpur districts.

The UGB is covering 57 per cent of the total districts and 63 per cent of the geographical area and 48 per cent of the total population of the State, said an official.

As the Government of India has approved the proposal to continue the process of recapitalization of RRBs, who are unable to maintain minimum capital to risk weighted assets ratio (CRAR) of 9 per cent, the UGB will reap the benefit.

As per assessment made by Nabard on its fiscal health, the UGB could not maintain the level of CRAR of 9 per cent for the year 2017-18 and requires recapitalization assistance. According to estimate, share capital required as on March 31 is Rs 323.02 crore.

The RRBs are jointly owned by the Union Government, the State

Government and the sponsoring bank and these organizations hold shares jointly.

Out of total share capital required to the tune of Rs 323.02 crore, the Government of India’s share is Rs161.51 crore, the State Bank of India’s share is Rs113.06 crore and the State Government’s share is Rs 48.45 crore.

And release of the Central Government share of capital is contingent on proportionate release of the State Government and sponsor bank share.

Now, the State Government will have to release share capital so that the Union Government will release its share of capital, informed Additional Secretary Financial Services to the State Government Ravi Mittal.

A Memorandum of Understanding (MoU) will be signed between the State Government, the SBI, and the Chairman UGB with Nabard.

Meanwhile, the SBI has conveyed their consent for infusion of their share capital in the UGB.

So. the State Government will have to take steps for release of its share capital of Rs 48.45 crore to the UGB.

Sources said that the State Government is making arrangements in this regard.

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