Saraswat Bank yet to submit merger plan: Leeladhar

Even as Saraswat Co-operative Bank has evinced interest to merge with other urban co-operative banks, it has not submitted any merger proposal to the banking regulator, said Reserve Bank of India (RBI) deputy governor V Leeladhar on Thursday.

Leeladhar said, "Saraswat Bank is interested in merging with other banks." He added that the central bank had not received any merger proposals so far.

"Banks will have to submit a proposal to the Registrar of Co-operative Societies in order to merge. They can also submit a proposal to RBI side-by-side," said Leeladhar.

According to sources, Saraswat Co-operative Bank has submitted proposals to RBI, expressing its intention to acquire Maratha Mandir Co-operative Bank, South Indian Co-operative Bank and Nasik Peoples' Co-operative Bank.

Talk of consolidation in the co-operative sector has gained momentum after the RBI released detailed guidelines on mergers and amalgamation last week.

"Regulating co-operative banks will be easy if there was a single regulator," said Leeladhar.

He said the online money transfer and settlement system, real time gross settlement (RTGS), will be across 500 cities by March. Currently, RTGS, which enables instantaneous fund transfers, is operating across 300 centres.

As of now fund transfer is mostly between banks and large corporates.

RBI is also in the process of constituting a board to regulate clearing and settlement of all transactions.

"The board will be set up shortly. The board will overlook RTGS, cheque truncation, cheque clearing and so on," said Leeladhar.

Currently this activity is overlooked by RBI.

"Eventually, this board will be an autonomous body independent of the RBI. This is the model adopted in developed countries. It is routine work which the regulator need not get involved with," he added.

Another payment project in the pipeline is the cheque truncation project. The project will be pilot tested in New Delhi.

Cheque truncation is a process in which the image of the relevant data of a cheque is electronically captured and transmitted to enable payment of that cheque to the payee's account and simultaneously debiting the account of the drawer without the physical movement of the cheque itself.