Saraswat Bank to Merge with New India Co-operative Bank, Ensuring Full Depositor Protection

In a landmark decision for India’s co-operative banking landscape, Saraswat Co-operative Bank has confirmed a voluntary merger with the financially distressed New India Co-operative Bank. The move awaits approvals from the Reserve Bank of India (RBI) and shareholders of both banks.

Merger Timelines, Regulatory Oversight and Due Diligence

The merger is expected to be completed by August–September, according to Saraswat Bank Chairman Gautam Thakur. New India Co-operative Bank was hit earlier this year by a major fraud involving ₹122 crore, prompting the RBI in February to impose restrictions and appoint an administrator. Administrator Shreekant reported that the bank’s collection efficiency has doubled in the last four months and highlighted its ₹1,100 crore retail-focused loan book.

Thakur confirmed that while a fraction of New India Co-operative Bank’s assets will transfer to Saraswat Bank, the merged entity’s asset quality and capital adequacy ratio will see a short-term impact. However, he expressed confidence in a turnaround within one to two years and projected that the balance sheet will cross ₹1 lakh crore this financial year.

“We have merged seven such banks with ourselves in the past, helping over eight lakh depositors without any haircut,” said Thakur. “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.”

Depositor Assurance, Growth Plans and Governance Safeguards

Thakur stated that depositors of New India Co-operative Bank will face no loss and will be able to withdraw their full funds after the merger. “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.”

As part of the process, shares may be issued to New India Co-operative Bank. However, Thakur clarified: “We 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 also intends to open 40–45 new branches, including the 27 from New India Co-operative Bank, with expansion plans into Rajasthan and other states. Despite this growth, Thakur asserted, “We aim to remain a shining example in the urban co-operative banking sector,” and clarified the bank has no ambition to become a universal bank.

As of 31 March 2025, Saraswat Bank reported deposits of ₹55,481 crore and advances of ₹36,333 crore. Net profit stood at ₹518.25 crore, gross NPAs were at 2.25%, and net NPAs remained at zero for the 3rd consecutive year. The bank’s capital to risk-weighted assets ratio was 17.43%.

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Conclusion

The proposed merger marks a crucial step in stabilising a fraud-hit co-operative bank while reinforcing depositor confidence. Backed by a clean track record and strong capital metrics, Saraswat Bank’s initiative underscores its leadership in the urban co-operative banking sector.

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