The country’s largest cooperative bank Saraswat Co-operative Bank received the Reserve Bank of India’s approval to merge New India Co-operative Bank (NICBL) with itself, sources privy to the development said. The merger will be effective from August 4 and the bank will take over all assets and liabilities of NICBL as well as its customers post the merger date. Senior officials from Saraswat Co-operative Bank declined to comment.
Saraswat Co-operative Bank had proposed a voluntary merger with NICBL on July 1 and on Thursday received a go-ahead from the RBI, sources said. In July, when Saraswat had informed the media about the proposed plan to acquire New India, its senior officials stated that it will fully protect depositors’ interests. They also stated that the cost of acquiring NICBL would be a fraction of its capital.
RBI had imposed a moratorium on NICBL on February 13 due to internal governance lapses that resulted in a ₹122-crore fraud. “Net NPAs have been zero for 3 consecutive years, the merger may increase this number by a few bps, while gross NPAs may rise for a year or two, but the balance sheet will settle within that period,” bank management told media early July.
