News

United Western Bank: A failure well flagged (BL 07.09.06) The failure of United Western Bank (UWB) does not come as a surprise to those in the know of the affairs of the bank, because, at least since 1998 the Reserve Bank of India has been regularly flagging failure symptoms, warning and penalising the bank for various irregularities. On May 30, 1998, the RBI imposed penalty of Rs 10 lakh in respect of irregular transactions in respect of Makharia Group of companies. In 1999, the RBI again asked the bank to pay a fine of Rs 5 lakh because it had allowed Gujarat Telephone Cables Ltd, to use cash credit facility for subscribing to the capital issue of GTCL Mobilecom. In 2001, the RBI again had reasons to fine United Western Bank. The bank had obtained the RBI's permission to give an interest-free loan of Rs 6 crore to the UWB Employees Equity Trust, but actually gave the Trust a loan of Rs 20 crore. The SEBI has also warned the bank and the employees' unions for various irregularities.