Saraswat Bank Seeks RBI Nod to Acquire New India Cooperative Bank

• Saraswat Cooperative Bank seeks RBI nod to acquire New India Cooperative Bank, offering relief to depositors stuck under Rs 25,000 withdrawal limits since February 2025.
• If approved, Saraswat will absorb all assets and liabilities, ensuring full protection of depositor funds and interest, covering Rs 2,397.8 crore in deposits and Rs 1,162 crore in loans.
• With a history of seven successful bank takeovers, Saraswat Bank aims to reinforce cooperative banking stability, despite a possible slight rise in NPAs post-acquisition.

Saraswat Cooperative Bank, India's largest cooperative bank, has officially approached the Reserve Bank of India (RBI) for permission to take over New India Cooperative Bank Ltd. This comes as a major possible relief for New India Cooperative's thousands of depositors, who have been under withdrawal restrictions since February 13, after RBI placed the bank under moratorium. At present, every depositor can withdraw a maximum of Rs 25,000, a restriction that has resulted in significant financial hardship for account holders.

In case the RBI approves the takeover, Saraswat Bank will inherit the full assets and liabilities of New India Cooperative Bank. The bank, as per Gautam Thakur, Chairman of Saraswat Cooperative Bank, is set to safeguard the entire interest component of the depositors, meaning that the takeover will not just relieve access to funds but also safeguard the returns to account holders. New India Cooperative Bank holds deposits amounting to Rs 2,397.8 crore and a loan book of Rs 1,162 crore.

Thakur highlighted that Saraswat Bank already has an impeccable track record of bank takeovers, having acquired seven cooperative banks earlier. He pointed out that the combined business of those banks grew from Rs 1,900 crore to Rs 9,200 crore after the acquisition, highlighting the bank's success in handling integrations. He was very confident that the RBI would sanction the proposed acquisition, highlighting operational synergies and geographical complementarity between the two banks as the prime drivers of the move.

Though the acquisition cost has not been revealed by the management, Thakur informed that it would be just a part of Saraswat Bank's capital base, indicating a financially sound and strategically worthy deal. He admitted that though Saraswat has nil net non-performing assets (NPAs) now, there could be a marginal rise in NPAs after the acquisition. In spite of this, the bank is financially strong, having recorded a net profit of Rs 518 crore for the year 2024-25. The action, if sanctioned, would be a watershed moment for India's cooperative banking stability, giving comfort to depositors and firming the consolidation route within the sector.