RBI Approves Merger of New India Co-operative Bank with Saraswat Co-operative Bank

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 ₹122 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.

TOI