Saraswat Bank To Merge Fraud-Hit New India Co-Operative Bank With Itself

In a significant move for the co-operative banking sector, Saraswat Co-operative Bank has announced its voluntary proposal to merge the beleaguered New India Co-operative Bank with itself.

The merger, which has pending approval from the Reserve Bank of India and shareholders of both institutions, aims to safeguard the interests of all depositors and ensure the stability of New India Co-operative Bank’s assets and liabilities post-merger.

The merger process is expected to be completed by August-September, Saraswat Bank Chairman Gautam Thakur said.

This has come as the RBI in February imposed strict restrictions on New India Co-operative Bank and appointed an administrator after a Rs 122-crore embezzlement scandal involving senior management.

Administrator Shreekant said that the bank’s collection efficiency has doubled in the last four months, and its loan book of Rs 1,100 crore is largely retail-focused.

While a fraction of New India Co-operative Bank’s assets will transfer to Saraswat Bank, asset quality and capital adequacy ratio of the bank will take a hit in the near term. However, Thakur expects turnaround for the merged entity to be completed within one-to-two years.

He expects the bank’s balance sheet to cross Rs 1 lakh crore in the current financial year.

Saraswat Bank, India’s largest urban co-operative bank, has a strong track record of supporting troubled co-operative banks.

“We have merged seven such banks with ourselves in the past, helping over eight lakh depositors without any haircut,” Thakur said. “As the largest player in the urban co-operative space, it is incumbent upon us to step in. The interest of depositors remains our utmost priority.”

He said that the merger with New India Co-operative Bank is expected to be smooth, with synergies anticipated between the two entities.

“We may issue some shares to New India Co-operative Bank as part of the process, but will fully cooperate with the Economic Offences Wing to ensure that no senior management involved in any embezzlement will be issued shares. A full audit will also be conducted.”

Saraswat Bank has assured that depositors of New India Co-operative Bank will face no haircut and will be able to withdraw their full funds once the merger is completed.

“Our due diligence is already done, and we are confident of digesting New India Co-operative Bank into our system. The RBI is fully aware of our capacity,” Thakur said.

Saraswat Bank also plans to open 40-45 new branches, including the 27 from New India Co-operative Bank, and is eyeing expansion into Rajasthan and other states as part of its growth strategy.

Despite its growing size, Saraswat Bank has no aspirations to become a universal bank.

“We aim to remain a shining example in the urban co-operative banking sector,” he said.

As of March 31, 2025, the bank’s deposits were at Rs 55,481 crore and advances at Rs 36,333 crore.

The lender's net profit was at Rs 518.25 crore, with gross NPAs at 2.25% and net NPAs at zero for the third consecutive year. The bank’s capital to risk weighted assets ratio was at 17.43%.