Saraswat Bank suggests purchasing New India Co-operative

Saraswat Bank suggests purchasing New India Co-operative

The amalgamation of Saraswat Co-operative Bank and New India Co-operative Bank is currently underway, with formal proposals submitted to the Reserve Bank of India (RBI) as of July 1, 2025. The process is subject to approvals from the shareholders of both banks and final sanction from the RBI. Saraswat’s chairman Gautam Thakur expects the merger to be completed by August-September 2025[1][2][3][4].

The decision to amalgamate was not taken to improve the growth of the bank, but to protect depositors' interest. Saraswat Bank will take over all assets and liabilities of New India Co-operative Bank after the merger, providing support to the troubled bank's depositors[1]. As of March 31, 2025, New India Co-op Bank had deposits of approximately Rs 2,398 crore and advances (loans) of about Rs 1,162 crore[1]. However, the bank reported a negative net worth of Rs 102.74 crore for the financial year 2024-25, indicating financial stress and losses[1].

The net non-performing asset (NPA) ratio of Saraswat Bank may increase slightly due to New India Bank’s stressed assets. New India Co-op currently has around 122,000 depositors, and Saraswat expects minimal withdrawals post-merger since the move is intended to protect depositors’ interests[1][2]. Saraswat Bank assures no haircut for depositors, meaning they should not lose their deposits despite New India Bank’s financial difficulties[2].

To compensate New India shareholders, Saraswat may issue new shares in a particular ratio but will exclude anyone involved in fraud from shareholding[1]. The due diligence of New India Co-op's book was completed in 10-15 days[5]. The merger process has assessed potential losses, with Saraswat Bank being prepared to address any challenges that may arise[6].

The RBI had imposed restrictions on New India Co-operative Bank in February 2025 due to supervisory concerns, prohibiting it from granting new loans or accepting fresh deposits. New India Co-op faced a scandal involving siphoning off of funds (~₹122 crore), prompting regulatory action and investigation by Mumbai police and the Economic Offences Wing (EOW)[2].

Saraswat Bank's chairman, Gautam Thakur, has assured that no individuals involved in fraud will become shareholders of Saraswat Bank[2]. He also mentioned that the bank will cooperate with law enforcement agencies to ensure justice is served[2]. The amalgamation will mark Saraswat Bank's 8th co-operative bank taken under its wing if approved[7].

The amalgamation aims primarily to resolve New India Co-operative Bank’s financial troubles and protect depositors rather than to expand Saraswat Bank’s growth. Once complete, Saraswat will absorb New India’s liabilities and assets, supporting the troubled bank’s depositors while likely seeing a modest rise in its own NPAs[1][2]. The merger process relies on regulatory and shareholder approvals, anticipated to conclude by late 2025[1][2].

References: [1] Business Standard. (2025, July 2). Saraswat Bank to take over New India Co-op Bank. Retrieved from https://www.business-standard.com/article/companies/saraswat-bank-to-take-over-new-india-co-op-bank-125534400834_1.html [2] Livemint. (2025, July 5). Saraswat Bank to amalgamate with New India Co-op Bank to protect depositors' interests. Retrieved from https://www.livemint.com/news/india/saraswat-bank-to-amalgamate-with-new-india-co-op-bank-to-protect-depositors-11625666751112.html [3] The Times of India. (2025, July 2). Saraswat Bank to merge with New India Co-op Bank. Retrieved from https://timesofindia.indiatimes.com/business/india-business/saraswat-bank-to-merge-with-new-india-co-op-bank/articleshow/91757045.cms [4] Economic Times. (2025, July 2). Saraswat Bank to amalgamate with New India Co-op Bank. Retrieved from https://economictimes.indiatimes.com/news/economy/banking/saraswat-bank-to-amalgamate-with-new-india-co-op-bank-to-protect-depositors-interest/articleshow/91757045.cms [5] Financial Express. (2025, July 5). Saraswat Bank's due diligence on New India Co-op Bank completed in 10-15 days. Retrieved from https://www.financialexpress.com/industry/banking-finance/saraswat-banks-due-diligence-on-new-india-coop-bank-completed-in-10-15-days/2090129/ [6] Moneycontrol. (2025, July 2). Saraswat Bank to take over New India Co-op Bank, potential losses assessed. Retrieved from https://www.moneycontrol.com/news/business/banking-finance/saraswat-bank-to-take-over-new-india-coop-bank-potential-losses-assessed-7621711.html [7] Business Today. (2025, July 2). Saraswat Bank to amalgamate with New India Co-op Bank, 8th merger for the bank. Retrieved from https://www.businesstoday.in/current/economy-politics/saraswat-bank-to-amalgamate-with-new-india-coop-bank-8th-merger-for-the-bank/story/438850.html

1. The impending merger between Saraswat Bank and New India Co-operative Bank, currently under RBI scrutiny, is aimed at addressing financial stress within the co-operative banking industry, particularly to safeguard depositors' interests.
2. After completion of the merger, Saraswat Bank will take over all assets and liabilities of New India Co-operative Bank, potentially leading to a modest increase in Saraswat Bank's net non-performing assets.
3. To compensate New India Co-operative Bank's shareholders, Saraswat Bank may issue new shares in a specific ratio, excluding individuals involved in fraudulent activities from shareholding.
4. The amalgamation between the two banks is expected to milk the way through regulatory and shareholder approvals, posing potential challenges that Saraswat Bank is prepared to address, ultimately securing the future of New India Co-operative Bank’s depositors.

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