Co-ops to see more consolidation

New Reserve Bank Of India guidelines pave the way

The way has been paved for a consolidation in close to a dozen co-operative banks of the state with the Reserve Bank of India (RBI) issuing guidelines earlier this month on the merger of weaker co-operative banks with weaker ones.

While the state government has already proposed four mergers, talks are on to merge other banks as well.

There is the case of Junagadh Vibhagiya Co-operative Bank merging with the Rajkot-based Rajkot Nagarik Sahakari Bank. The Junagadh Vibhagiya Bank had gone weak ten years ago and the Rajkot Nagarik Sahakari Bank has since been controlling the administration.

A few weeks ago, the managements of Co-operative Bank of Rajkot, having deposits in excess of Rs 250 crore, and Rajkot Peoples' Co-operative Bank, having deposits of around 100 crore, announced that they would like to merge in a bid to provide more financial stability and increased reach.

Surat-based the Prime Co-operative Bank Ltd has evinced interest in taking over two ailing co-operative banks. The two banks are Adajan Nagarik Sahakari Bank Ltd, which is based at Surat, and the Baroda Mercantile Co-operative Bank Ltd, based in Vadodara. However, just last week, the state government appointed a liquidator for Baroda Mercantile Co-operative Bank.

Prime Co-operative Bank officials have stated in the recent past that talks for taking over the two banks have been going on for some time with the board of directors of all the three banks having given their consent for the move.

Prime Bank is even expected to send a detailed proposal about the takeover to the state registrar of co-operatives. With the RBI issuing guidelines, the possible takeover of these banks by the Prime Bank can be hastened.

Banking sources also stated that moves are also afoot to merge the multi state cop-operative bank Kalupur Commercial Co-operative Bank (KCCB) with the beleaguered Standard Co-operative Bank.

With the RBI guidelines, it is likely that the process of merging the two banks will be hastened. The state government had also proposed the merger of Ahmedabad based Sindh Mercantile Co-operative Bank with Gandhidham Co-operative Bank based at Gandhidham in Kutch.

State co-operation minister Bhupendrasinh Chudasama could not be reached for comment.