In a move aimed at protecting depositors and strengthening the urban cooperative banking sector, Saraswat Co-operative Bank, the largest urban cooperative bank in India, has sought approval from the Reserve Bank of India (RBI) to acquire the troubled New India Co-operative Bank. The proposed acquisition, a voluntary amalgamation, seeks to provide relief to depositors of New India Co-operative Bank who have faced restrictions on accessing their savings since February.
The RBI has already given in-principle approval to the amalgamation, which is subject to the approval of shareholders of both banks. The scheme of amalgamation, outlining the terms and conditions, will be presented to the shareholders for their consideration. If approved, the proposal will then go to the RBI for final clearance, with the merger expected to be completed by August-September 2025.
The decision to acquire New India Co-operative Bank comes after the detection of a ₹122 crore misappropriation of funds at NICB earlier in 2025, discovered during an RBI inspection. The Economic Offences Wing (EOW) of the Mumbai Police is currently investigating the case, with allegations that bank executives siphoned off funds using fake loan accounts. Saraswat Bank has assured full cooperation with the EOW and other investigating agencies and has stated that none of NICB's current executives, employees, or promoters will have any stake in the merged entity.
Saraswat Bank Chairman Gautam Thakur emphasized that the interests of New India Co-operative Bank depositors would be fully protected, with no haircuts on their deposits. Depositors will be able to access the full amount of their savings once the merger is effective. Thakur also highlighted the synergy between the two banks, citing geographical presence as a key driver.
As of March 31, 2025, Saraswat Bank reported a total business of ₹91,814 crore, with deposits of ₹55,481 crore and a network of 312 branches across eight states. In comparison, New India Co-operative Bank had a total business of ₹3,561 crore, including deposits of ₹2,397.85 crore and advances of ₹1,162.67 crore. However, NICB also reported a negative net worth of ₹102.74 crore for the financial year 2024-25 and operates 27 branches.
Saraswat Bank has a history of acquiring struggling cooperative banks, having successfully integrated seven such lenders in the past. This experience gives them confidence in their ability to turn around New India Co-operative Bank within 18-24 months. While the acquisition may cause a marginal increase in Saraswat Bank's net non-performing assets (NPA), the bank is confident in its ability to absorb the impact and recover within a year or two.
The acquisition of New India Co-operative Bank by Saraswat Bank is seen as a landmark move towards consolidation and strengthening of the urban cooperative banking sector. By protecting depositors and improving operational capabilities, this merger sets a positive example for future consolidations in the cooperative banking space.
