Abstract

The case describes the growth and collapse of United Western Bank Limited (UWBL), a private sector commercial bank in India. Since the late 1990s, UWBL was facing several problems including asset-liability mis-management, inefficient management of bank’s assets, irregular transactions with some of its major shareholders like Makharia Group, conflicts between the bank’s major shareholders regarding the ownership of the bank and poor governance. These problems collectively resulted in the collapse of UWBL. In order to protect the interests of the creditors of UWBL, the Government of India (GoI) announced the merger of the bank with IDBI Bank. The case further details the terms of the merger and ends with a brief analysis of the future prospects of the merged entity.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the nature of the challenges faced by microfinance institutions in India, especially during the growth phase.

Keywords

United Western Bank, Asset-liability Management, Bank Failures , Capital Adequacy Ratio, Non-performing Assets, Makharia Group of companies, Capital Adequacy Norms, Moratorium Order, Capital to Risk Weighted AssetS, Liquidity Management, Banking Regulation Act, Bank Restructuring, Asset Quality, UWBL-IDBI Bank Merger