Mumbai: The Reserve Bank of India (RBI) has approved the merger of New India Co-operative Bank (NICBL) with Saraswat Co-operative Bank, with the amalgamation set to take effect from 4 August. The move is expected to bring relief to over 1.22 lakh depositors of NICBL, who have faced withdrawal restrictions since February this year.
The central bank sanctioned the Scheme of Amalgamation under Section 44A(4) of the Banking Regulation Act, 1949, following approval from the boards and shareholders of both banks. According to a PTI report, Saraswat Bank will take over all assets and liabilities of NICBL, and the latter’s 27 branches will be rebranded and function as Saraswat Bank outlets.
NICBL was placed under a moratorium by the RBI on 13 February 2025, after a Rs 122 crore embezzlement case came to light. The scam involved former General Manager Hitesh Mehta and former CEO Abhimanyu Bhoan, leading to financial instability and regulatory action.
The merger marks the integration of two co-operative banks of vastly different scales. Saraswat Bank, the country’s largest urban co-operative bank, reported total business of Rs 91,814 crore as of March 2025, comprising Rs 55,481 crore in deposits and Rs 36,333 crore in advances. By contrast, NICBL’s total business stood at Rs 3,560 crore, with deposits between Rs 2,250 crore and Rs 2,398 crore, and advances ranging from Rs 1,100 crore to Rs 1,162 crore, as per major media reports.
Despite NICBL’s negative net worth of Rs 102.74 crore, Saraswat Bank is expected to absorb the impact without significant stress, owing to its strong financial position and a capital adequacy ratio of over 17 per cent.
Analysts expect a marginal increase in Saraswat Bank’s gross non-performing asset (NPA) ratio following the merger but believe recovery could be achieved within 18 to 24 months.
