Context:
Saraswat Cooperative Bank has formally approached the Reserve Bank of India (RBI) seeking approval to merge the troubled New India Cooperative Bank (NICB) with itself, provided both institutions receive shareholder approval. The move aims to rescue NICB, which is facing financial distress and regulatory restrictions.
Background on NICB’s Crisis
- In February 2025, RBI imposed severe restrictions on NICB:
- Barred from issuing fresh loans.
- Withdrawals were capped at ₹25,000 per depositor.
- RBI superseded the board and appointed an administrator.
- The trigger: allegations of fund misappropriation and negative net worth.
- As of FY25, NICB’s net worth is negative ₹102.74 crore.
Saraswat Bank’s Proposal
- Saraswat aims to:
- Take over assets and liabilities of NICB.
- Protect depositor interests.
- Consider issuing shares to NICB shareholders in a restricted manner (excluding those involved in fraud).
