Odisha government has approved the proposal calling for the merger of the Bhuwaneshwar based Urban Co-operative bank with Cosmos Co-operative bank, based in Pune.
Official sources confirmed as Chief Secretary, B K Patnaik said, "The merger of the two banks will be completed in three to four months." He further added that this step would secure the deposits of 13,000 investors.
The decision comes after the failure of Odisha government's repeated attempts to revive the, now defunct, Urban Co-operative bank.
The bank, which was set up in 1988, has been incurring continuous losses since 2001 and had ultimately become defunct. This, despite the fact, that its investors had deposited Rs. 28 crore into the bank. In 2007, the state government also, gave it a further equity assistance of Rs 6 crore for its revival but failed to do so.
On the other hand, Cosmos Bank, a scheduled bank, has its branches in six states. These are Tamil Nadu, Karnataka, Maharashtra, Gujarat, Madhya Pradesh and Andhra Pradesh.
According to official sources, this merger would help the depositors of the Bhubaneswar based bank to get their deposit amounts back along with interest. Also, Cosmos bank has agreed to accommodate 32 out of 43 regular employees of Orissa Co-operative Bank.
On the service guarantee of the bank employees, Patnaik said, "The Bank will give priority to former employees of the Urban Co-operative Bank if it undertakes any recruitment in future."