Thursday, September 28 2006 12:54 Hrs (IST) - World Time -

Mumbai: The Reserve Bank of India (RBI) yesterday (Sept 28,2006) justified before the Bombay High Court the reasons for imposing a moratorium on the Satara-based United Western Bank (UWB) stating that the step was to safeguard the interest of the depositors of UWB.

In its affidavit filed in reply to a petition filed by three depositors of the UWB challenging the RBI's moratorium order, the apex bank listed reasons like increasing non-performing assets (NPA's) and mounting losses apart from a negative CRAR in support of its step.

If the moratorium was not imposed, the financial position of UWB would have deteriorated further and the depositors would have lost their deposits, the RBI stated.

UWB, which has been made a party to the case by the three depositors--Varsha Deshpande, Rajendra Chorge and Balasaheb Kharat--in its affidavit filed today, stated that the bank's financial health was not so bad that a moratorium had to be imposed.

The under-moratorium bank maintained that there was ageneral slowdown in the banking sector for various reasons and UWB was affected due to this.

The High Court is expected to hear the case today (Sept 28, 2006) morning, counsel for the depositors, Uday Warunjikar told sources here.

Further, an intervention application made on behalf of the UWB Bachao Samiti, Pune, headed by Anna Joshi, was also submitted before the High Court today.

The samiti has supported the Sicom-GoM-HDFC Group's reconstruction package for the revival of UWB which was submitted to the RBI as a feasible solution.