Context:
The Reserve Bank of India (RBI) has approved the amalgamation of fraud-hit New India Co-operative Bank (NICB) with Saraswat Co-operative Bank (SCB), under its voluntary merger framework for Urban Co-operative Banks (UCBs).
Key Highlights:
- What Happened
- Saraswat Co‑operative Bank, India’s largest urban cooperative bank, has secured RBI approval to merge with the fraud-hit New India Co‑operative Bank (NICB).
- The merger is effective from August 4, 2025, and all NICB branches will operate as Saraswat Bank branches from that day onward.
- Reason for the Merger
- NICB was placed under RBI moratorium in February 2025 following governance failures and a â‚ą122 crore fraud by senior officials, which resulted in frozen withdrawals and deposit restrictions
- Saraswat Bank voluntarily proposed to absorb NICB to safeguard investors’ interests and stabilize the bank’s operations.
- Initiation
- India’s largest UCB, Saraswat Bank, had voluntarily proposed the merger to RBI.
Significance
- Strengthens Saraswat Bank’s presence in Maharashtra, especially Mumbai.
- Enhances stability in the UCB sector by protecting depositors and resolving distressed bank assets.
- Reinforces RBI’s strategy of consolidation and clean-up in the co-operative banking space through voluntary amalgamations.
