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Saraswat Cooperative Bank has approached the Reserve Bank of India (RBI) to merge ailing New India Cooperative Bank (New India) with itself if there is shareholder approval at both the entities.
The RBI in February had prohibited New India, based in Mumbai, from issuing fresh loans and suspended deposit withdrawals for six months.
The RBI then superseded the board and appointed an administrator for the bank. Later depositors were allowed to withdraw up to ₹25,000.
The RBI’s intervention was triggered by allegations of fund misappropriation by some officials of New India. The net worth of the lender had turned negative.
“We are the largest in the cooperative space and it is incumbent on us as the leader of this sector to step in wherever we feel it is necessary. New India by its size warrants that a larger bank should take an interest and there are many synergies we see with New India. The turnaround is expected in 18-24 months,” said Gautam E Thakur, chairman, Saraswat Bank.
Thakur said after the merger Saraswat would take over the assets and liabilities of New India. Depositors’ interests will be protected. Saraswat is expecting the RBI’s approval by September.
Officials involved in the process said the idea had been worked on over the past three months.
“Both the banks are multi-state cooperatives and New India has a strong customer base in Mumbai,” Thakur said.
Saraswat has 312 branches across eight states — Maharashtra, Goa, Gujarat, Karnataka, Madhya Pradesh, Delhi, Haryana, and Uttar Pradesh — with a business (loans plus deposits) of ₹91,814 crore as on March 31, 2025.
New India has a business of ₹3,560.52 crore across 27 branches in Mumbai, Thane & Palghar, Surat, Pune, and Navi Mumbai.
The deposits of Saraswat on March 31, 2025, were ₹55,481 crore and advances ₹36,333 crore.
The advances of New India are ₹1,162.67 crore and it has deposits worth ₹2,397.85 crore. It recorded a negative net worth of ₹102.74 crore for 2024-25.
“All their deposits will be safe with us. Also, even though the net worth (of New India) is negative, we might issue some shares in a particular ratio to the shareholders of New India. Nobody involved in the fraud or embezzlement (directors or employees) will be shareholders in the merged entity. We will cooperate with agencies to see to it that whoever is involved is brought to justice,” Thakur said.
Saraswat Bank had acquired seven cooperative banks and increased the business of ₹1,900 crore at the time of takeover to ₹9,200 crore in five years.
The bank plans to end the year with a business of over ₹1 trillion.
“We don’t want to become a commercial bank, but want to remain a shining example in the cooperative space,” Thakur said.
The Deposit Insurance and Credit Guarantee Corporation has started the process of claim settlement.
Initially, it said it would be completed by May 14, but that was extended to August 12. If the merger proposal goes through, the option of insurance claims will not be available.
