Kalupur Bank to merge Saurashtra Co-op Bank

The co-operative banking sector in Gujarat seems to be on the growth trajectory testified by the leading co-operative bank being on a merger and acquisition spree.

The Kalupur Commercial Co-operative Bank Ltd (Kalupur Bank) has chalked out plans to merge yet another profit-making co-operative bank into its fold.

On the latest merger, Dinesh M Amin, managing director of Kalupur Bank said, "We will merge Saurashtra Co-operative Bank Ltd by December-end this year."

A couple of months ago, the board of directors of Kalupur Bank had passed a resolution on the proposal to merge the Saurashtra Co-operative Bank Ltd (SCBL) and Manik Chowk Co-operative Bank Ltd (MCCBL) into itself.

On Monday, an extraordinary general meeting (EGM) was called where the members and shareholders of the Kalupur Bank sanctioned the merger of Saurashtra Co-operative Bank Ltd. "But the merger of MCCBL was rejected in the EGM," informed Amin. Both targeted banks are based in Ahmedabad.

SCBL is a single branch bank with 23,000 members and with zero NPA. The bank has a profit of Rs 10 crore which will be taken over by Kalupur Bank after the merger. The merger proposal is now awaiting the passing of resolution at the EGM.

"Once it is passed at the EGM of SCBL, we will put forward for permission and validation of the merger to the RBI," added Amin.

On the reason for the rejection of merger of MCCBL by the members and shareholders at the Kalupur Bank's EGM, Amin said, "The major cause of the rejection of the merger proposal of MCCBL was its lingering union problems."

According to Amin, the major hurdle to the merger of MCCBL was the intransigence of the union and the staff members. MCCBL has a loss of Rs 15 crore (NPAs) and has 10 branches in Gujarat, with a major presence in Ahmedabad.

In the past, the bank expanded through the acquisition of four co-operative banks, viz. Vikram Co-operative Bank, Standard Co-operative Bank, Royal Co-operative Bank and Tapi Co-operative Bank. The bank also undertook modernisation and expansion by adopting core banking solution, Real Time Gross Settlement (RTGS) and other services.

The bank is mulling approaching the RBI for licences for new branches in Gujarat, after the latter removed the restriction on co-operative banks' expansions through new branches.

However, Amin mentioned that the bank will continue to assist smaller banks and banks which are in troubled waters by merging them into it as and when it receives proposals from such co-operative banks in Gujarat.

As of fiscal 2006-07, Kalupur Bank had deposits of Rs 1,100 crore and, loan and advances of Rs 550 crore. As per the unaudited results, the estimated net profit of the bank stood at Rs 38 crore compared to Rs 18 crore of last year. The bank claims to have the highest capital adequacy ratio (CAR) of 46 per cent.