The race to acquire the beleaguered United Western Bank (UWB) has finally come to an end with Industrial Development Bank of India (IDBI) all set to acquire it, the Reserve Bank of India (RBI) has announced.

According to a release on the website of the central bank, the draft scheme of amalgamation has been sent to both the banks.

The Reserve Bank has invited suggestions and objections on the draft scheme from the members of public, including the banks' shareholders, depositors and creditors, the release added.

Both banks have till September 27 to consider the amalgamation scheme. The board of UWB is likely to meet soon to dicusss the matter.

Feedback is also being sought from members of the public, including the banks' shareholders, depositors and creditors.

The Reserve Bank will take a view on the future set up of UWB soon thereafter.

Since IDBI is adequately capitalised, it will not have to pump money into UWB, which has a net worth of Rs. 70 crore.

However, IDBI will have to pay UWB shareholders Rs. 150.55 crore at Rs. 28 a share, which works out to a 31 percent premium over UWB's closing price of Rs. 21.45 on the Bombay Stock Exchange.

With UWB secured, IDBI's branch tally will swell to 425 from 195 now. The merger will also expand IDBI's asset base by Rs. 7,166 crore.

Over 10 banking and financial institutions were in the fray ever since UWB was placed under moratorium by the Indian government on September 2 citing poor financials and the need to protect depositors.

Some of those which had made public their expression of interest (EoI) were ICICI Bank, Standard Chartered Bank, HDFC Bank, Citigroup, the co-operative Saraswat Bank, Canara Bank, Federal Bank, Andhra Bank, Allahabad Bank, UCO Bank, Corporation Bank, Indiabulls Financial Services Limited (IBFSL) and Maharashtra state government's financial undertaking, Sicom, which holds little more than 10 percent stake in UWB.

UWB has a wide rural network in Maharashtra, with 230 branches, Rs. 7,000 crore assets spread across nine states in the country and nearly 20 lakh depositors – a good reason why so many parties were interested in it.

It was learnt, earlier, that there will be no bidding process for the amalgamation and RBI's discretion will be supreme.

Officials from RBI said the central bank has various yardsticks to decide who would take over such banks. Apart from whether it would be in the best interest of its depositors, it would depend on synergies post acquisition.

According to analysts, the public sector banks had an edge over their private counterparts. The public sector banks generally get preference over the private sector banks (in the merger of sick banks), they said.

The minimum investment to acquire ailing UWB was estimated at Rs. 300 crore.

Incorporated in 1936, UWB has its head office at Satara, Maharashtra, which oversees the operations through the five zonal offices at Mumbai, Pune, Kolhapur, Jalgaon and Nagpur.

Keeping in view the depositors, sick banks are generally merged with the state-run banks.

In recent times, the RBI allowed Punjab National Bank to take over Nedungadi Bank in Kerala while Oriental Bank of Commerce picked up private sector Global Trust Bank (GTB) in Hyderabad. However, ICICI Bank was allowed to acquire southern India's Bank of Madura.

Some other mergers include Ganesh Bank of Kurundwad with Federal Bank, Union Bank of Pakistan with Standard Chartered Bank and most recently, Lord Krishna Bank with Centurion Bank of Punjab.

UWB has also forwarded a reconstruction scheme to the RBI.

As part of the scheme, the bank has committed to infuse Rs. 350 crore, or $ 76 million immediately to meet all liabilities, achieve adequate capital to risk weighted assets ratio and net worth requirements, it said in a statement.

India has a history of ailing banks being merged with state-run banks to save depositors, but shareholders usually got nothing since the net worth of the banks were negative.