Thursday, September 14 2006 11:59 Hrs (IST) - World Time -

Mumbai: The State Government is not very happy with the Reserve Bank of India's decision to merge the United Western Bank (UWB) with the Industrial Development Bank of India (IDBI) stating it would affect the Maharashtrian character of the bank.

Minister for Finance Jayant Patil said he discussed the issue with the chief minister and decided to convey their displeasure to RBI through the UWB board.

The RBI has invited response from UWB on the merger. But, the final decision on whether the RBI's decision could be challenged in the court has to be taken by the UWB board.

Admitting that the RBI decision was a clear rejection of state government's proposal Patil said, "I fail to understand why the RBI has decided to amalgamate the rural-based UWB with an industrial bank like the IDBI."

The UWB's base is rural and has highest networking through 38 branches in rural Maharashtra.

On comfort factor between IDBI and UWB he said, "It is like marriage. Once it is solemnised, the only option is to live together. It has to be seen whether the partners can adjust physically and mentally."

When pointed out that the RBI had to recommend this proposal because of mismanagement in UWB's board, which had government support, Patil refuted the charge.

Instead, Patil said, "The chairman of the UWB was a RBI man for the last three years. The deterioration in the bank also started around the same time. How can state government of SICOM be held responsible?"

By setting Rs28 as UWB's share price, RBI has admitted that the bank's financial health is fine and has an in-built mechanism to override the crisis.

Patil said he would not like to make any adverse comments against Centre's role on the merger as he was not aware if there were any lobbies working against the state government proposal.