Centre Rescues Utkal Bank

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

This Major Regional Rural Bank (RRB) promoted by State Bank of India, which is operating in Southern and Western Odisha.

Ministry of Finance in Department of Financial Services (DoFS) has informed the State Government in this regard, said sources in Department of Finance.

The Bank operates in 17 districts of Western and Southern Orissa. Bolangir, Sonepur, Bargarh, Sambalpur, Deogarh, Jharsuguda, Sundargarh, Kalahandi, Nuapada, Kandhamal, Boudh, Ganjam, Gajapati, Koraput, Malkangiri, Rayagada and Nabarangpur districts.

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

As 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 09 Percent, UGB will reap the benefit of this decision.

As per assessment made by NABARD on its Fiscal Health, UGB could not maintain the level of CRAR of 09 Percent for the Year 2017-18 and require Recapitalization Assistance.

According to estimate, Share Capital required as on 31 March, 2019 is Rs.323.02 Crore.

RRBs are Jointly Owned by Union Government, State Government and Sponsoring Bank and these organization hold shares Jointly.

Out of total Share capital required to the tune of Rs.323.02 Crore,  Government of India share is Rs.161.51 Crore, State Bank of India share is Rs.113.06 Crore and State Government share is Rs.48.45 Crore.

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

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

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

In the meantime SBI has conveyed their consent for infusion of their Share Capital in UGB.

So the State Government will have to take steps for release of its Share Capital of Rs.48.45 Crore to UGB.

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

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