The list of suitors is so long that it seems set to bury important questions such as why the RBI did nothing as the bank kept piling on bad loans and a former investment banker tried to acquire the bank, probably on behalf of an industrialist. The capital market regulator and stock exchanges also failed to prevent brazen price manipulation for almost a year that allowed UWB to price its recent rights issue at a premium even when losses were mounting.

All this does not augur well for the process of selecting a sensible acquirer who would do well by all the bank’s stakeholders. In fact, it points to the likelihood of political interference. Otherwise, UWB’s acquirer is most likely to be decided by a process of elimination.

For starters, there is enormous pressure to eliminate all banks that have been penalised in the IPO allotment scandal and are not allowed to open new branches. In fact, they triggered the initial rush of suitors for UWB since the winner could hope to for a sudden, 230-branch expansion with a strong presence in rural Maharashtra.

The RBI’s alleged decision to punish banks by barring them from opening new branches itself needs some discussion. One uses the word ‘alleged’ because banks deny media reports about the three-year ban, while the RBI is officially silent on the issue. It is indeed a fact that these banks have not been allowed to expand for almost a year and no permissions are on the horizon either.

... contd.