Punjab National Bank’s board of directors has approved the proposal of acquiring Kerala-based Nedungadi Bank paving the way for the Delhi-based bank’s expansion in the southern state.“The board has approved the merger of Nedungadi Bank with PNB. We have to do the due diligence now,” PNB chairman S.S. Kohli told PTI but did not give the details. Banking sources, however, said PNB is not in favour of taking over liabilities of over Rs 35 crore while merging the troubled Nedungadi Bank with itself.The merger move follows Reserve Bank notifying the draft scheme of amalgamation of Nedungadi Bank Ltd with PNB on November 14. RBI had placed the Kerala-based bank under moratorium up to February 1, 2003 and restricted depositors from withdrawing more than Rs 5,000 in this period.RBI also assured that the proposed amalgamation envisaged full protection of public deposits and it would make all efforts to complete the due process for the proposed merger as early as possible. The scheme was forwarded to both banks for their comments and suggestions or objections by November 30.Sources said PNB has informed RBI that it would not like to take over liabilities over Rs 35 crore and intends to place its claim before deposit insurance and credit guarantee corporation. Kohli said the merger was likely to be finalised by February next year in line with the RBI moratorium. PNB was shortlisted by the banking division under finance ministry for taking over Nedungadi Bank in September.
