HYDERABAD: The umbilical cord between Andhra Bank and the two Telugu-speaking States of Telangana and Andhra Pradesh will soon be severed. A few quarters from now, Andhra Bank, which was once the largest private sector banks, will be the stuff of history.
With the Union Finance Ministry announcing the merger of public sector banks, Andhra Bank will lose its identity and logo, while its headquarters will move to the financial capital Mumbai from Hyderabad. The merged entity will evolve as the country’s fifth-largest bank with Rs 14.59 lakh crore in annual business.
The bank has a workforce of 20,346 as on June, which bank employee unions fear will see some layoffs though the government dismissed any such move. The proposed merger will take about six to 12 months after receiving approvals from the respective bank boards, regulators like the RBI and Sebi, shareholders and others.
Humble beginnings: The bank not only has a historical and patriotic background but had several firsts. Founded as an offshoot of national freedom movement by eminent freedom fighter Dr Bhogaraju Pattabhi Sitaramayya, Andhra Bank was the first commercial bank to be set up in the coastal town of Machilipatnam in Andhra Pradesh.
It was registered on November 20, 1923 and commenced commercial business eight days later with a paid up capital of Rs 1 lakh and an authorised capital of Rs 10 lakh, which later increased to Rs 25 lakh and Rs 1 crore respectively in 1946. Sitaramayya served as its MD from 1923 to 1931 and continued as director for another ten years till 1941.
Andhra Bank attained the status of scheduled bank in 1943 and ventured outside the then united AP in 1945 opening a branch in Tamil Nadu.
In 1963, its headquarters was moved to Hyderabad from Machilipatnam. A few years after Andhra Bank, Sitaramayya also founded Bharata Lakshmi Bank in 1929, which was subsumed into Andhra Bank in 1964. Following nationalisation of 14 banks in 1969, Andhra Bank emerged as the largest lender among the non-nationalised banks or private banks, a position it maintained till it was nationalised in April, 1980 along with five other banks. Since its formative years, the bank has been a primary source of formal finance for several small scale industries, farmers, foreign trade and weaker sections.
For the benefit of farmers, it introduced Kisan card, while for the rural folk, multiple rural credit branches were opened. It also has the distinction of being the front-runner in promoting credit cards as early as 1980s.
Subsidiaries: Andhra bank’s subsidiary — Andhra Bank Housing Finance Ltd — was merged with the bank in April 2002, while another wholly-owned subsidiary namely Andhra Bank Financial Services Ltd incorporated in February 1991 was discontinued in 1992 following its litigation with foreign lender Standard Chartered. Andhra Bank sought renewal of its registration from the RBI but was rejected. However, in 2008, it once again requested the RBI to treat it as a non-banking non-financial institution and received the consent, but has no significant operations.