RBI Approves Major Co-op Bank Overhaul; Four Gujarat Banks To Merge Into Two By December-End

In a significant move aimed at strengthening the cooperative banking sector, the Reserve Bank of India (RBI) has approved the merger of four urban cooperative banks in Gujarat into two entities. The mergers, which took effect on December 15, 2025, are part of the RBI's ongoing efforts to consolidate and improve the financial stability, governance, and operational efficiency of cooperative banks.

The RBI has sanctioned two schemes of amalgamation under sub-section (4) of Section 44A read with Section 56 of the Banking Regulation Act, 1949.

Details of the Mergers

The approved mergers involve the following banks:

• The Amod Nagric Co-operative Bank Ltd., Amod merging with The Bhuj Mercantile Co-operative Bank Ltd., Ahmedabad. Following the merger, all branches of The Amod Nagric Co-operative Bank Ltd. will operate as branches of The Bhuj Mercantile Co-operative Bank Ltd.
• Amarnath Co-operative Bank Ltd., Ahmedabad merging with The Kalupur Commercial Co-operative Bank Ltd., Ahmedabad. Consequently, all branches of Amarnath Co-operative Bank Ltd. will function as branches of The Kalupur Commercial Co-operative Bank Ltd.

Implications for Customers

The RBI has clarified that the mergers will not negatively impact the banks' existing customers. Banking services will continue smoothly, and customers do not need to panic. Specifically:

• All savings accounts, fixed deposits, and loan accounts have been transferred to the new banks.
• Interest rates, Equated Monthly Installments (EMIs), and repayment terms will remain unchanged.
• Online banking, Unified Payments Interface (UPI), and cheque facilities will continue as usual.
• Passbooks and bank statements will soon reflect the new bank names.

Customers are, however, advised to visit their nearest branch to update their bank details and verify balances in their mobile or net banking accounts.

Rationale Behind the Mergers

These consolidations are expected to provide greater stability, better service delivery, and improved protection for depositors within the cooperative banking system. The mergers aim to consolidate resources and improve service efficiency for customers. The RBI has been actively encouraging such mergers to ensure that smaller cooperative banks evolve into stronger financial institutions, enhancing depositor protection and strengthening the overall banking ecosystem.

Regulatory Framework

The mergers have been executed under two separate schemes approved by the RBI under the provisions of the Banking Regulation Act, with the mutual consent of the concerned banks. The Banking Regulation Act, 1949, provides the legal basis for the voluntary amalgamation of co-operative banks, subject to RBI approval.

Future Outlook

Experts believe this move will bring long-term stability and efficiency to the cooperative banking sector. The RBI's initiative is expected to set a precedent for further consolidation within the cooperative banking space, fostering a more robust and reliable financial system.