Saraswat Co-operative Bank, India’s biggest urban co-operative bank, has announced it will merge New India Co-operative Bank which is currently facing financial distress. This news was officially announced by Saraswat Bank’s chairman, Gautam Thakur, during a press conference held in Mumbai.
This decision comes after NICB ran into trouble because of a ₹122 crore fraud involving its senior management. Because of this, in February, the RBI stepped in, imposed restrictions, and appointed an administrator to manage the bank. However, the merger is not final yet it still needs to be approved by the shareholders of both Saraswat Bank and NICBL.
Process of the merger
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Saraswat Bank has voluntarily approached the RBI for permission to go ahead with the proposed merger with New India Co-operative Bank. This means the decision is proactive, not forced by regulators.
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First, the merger must be approved by the shareholders of both Saraswat Bank and New India Co-operative Bank (NICB).
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Then, the RBI will review the proposal, if satisfied the RBI will give its official approval and give a final date for when the merger will be implemented.
- As part of the merger, NICB shareholders will be given shares in Saraswat Bank, based on a set ratio known as the Share Exchange Ratio. For example, if the ratio is 1:5, it means that for every 5 shares of NICB, a shareholder will get 1 share of Saraswat Bank.
Key Highlights of the Saraswat–NICB Merger Proposal
- Bank promise to protect the depositors money (customers who have savings in the bank)
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Currently, NICB customers can only withdraw ₹25,000 per account because of the bank’s financial trouble but after the merger, depositors will be able to access all their money, with no loss (“no haircut”), according to Saraswat Bank chairman Gautam Thakur.
- Saraswat Bank promises no one will lose any money, and all funds will be safe and available after the merger.
- Post merger, Saraswat Bank will take over all the assets and liabilities of New India Co-operative Bank, while fully protecting the interests of the depositors. This might slightly affect Saraswat Bank’s short-term financial health, however bank says it can handle it and expects to recover in 1–2 years.
- The merger is expected to be completed by August or September 2025.
New India Co-operative Bank (NICB) current situation.
- NICB has 27 branches, with 17 located in Mumbai and has around 200 employees.
- After uncovering of ₹122 crore fraud in February, the RBI stepped in, imposed restrictions, and appointed an administrator to manage the bank.
- NICB still has over ₹1,100 crore in assets as of March 2025.
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Saraswat Bank believes that not all of NICB loans are bad and it can fix the problems within 18–24 months.
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Saraswat Bank says after the merger it will absorb as many employees as possible, except those involved in the fraud.
Financial Position of Saraswat Bank
Saraswat Bank is financially strong, with ₹36,000 crore in assets. It has helped merge 7 other troubled banks in the past. As of March 2025,
- The bank had collected ₹55,481 crore from customers in the form of deposits.
- It had given out ₹36,333 crore as loans to individuals and businesses.
- The bank earned a net profit of ₹518.25 crore, which shows bank is financially healthy.
- The Capital to Risk Weighted Assets Ratio (CRAR)was 17.43%, which is well above the regulatory requirement. This shows the bank is well-capitalized.
Future Plan of Saraswat Bank
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Saraswat Bank will continue as a cooperative bank for now.
- Saraswat Bank will open 40–45 new branches, including 27 from New India.
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It plans to expand to new states like Rajasthan.
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It has no plans to become a full-scale commercial bank—it wants to stay a leading co-operative bank.
- It may consider becoming a universal bank in the future if the law allows.
Saraswat Bank is stepping in to rescue New India Co-operative Bank to protect depositors and maintain trust in co-operative banking. This merger aims to ensure smooth banking operations, and help NICB recover under Saraswat Bank’s leadership.
Few Financial Terms Used Here:
SET RATIO – In a merger or acquisition, when one company buys another using shares instead of cash, they use something called a share exchange ratio. This ratio tells us how many shares of the buying company (called the acquirer) will be given for each share of the company being bought (called the target).
Capital to Risk Weighted Assets Ratio (CRAR) – also called Capital Adequacy Ratio (CAR), is a number that shows how strong and safe a bank is when it comes to handling risk. It tells us whether a bank has enough money of its own (called capital) to cover possible losses from the loans and investments it has made.