Saraswat Co-op may take over SICB, Maratha Mandir Bank

Saraswat Co-operative Bank Ltd is likely to take over the distressed South Indian Co-operative Bank Ltd (SICB) and Maratha Mandir Co-operative Bank.

The Registrar of Co-operative Societies and the Reserve Bank of India (RBI) are contemplating merger of troubled South Indian Co-operative Bank and Maratha Mandir Co-operative Bank with Saraswat Co-operative Bank, said banking sources.

SICB is a multi-state co-operative bank with 75 branches. Its net non-performing assets (NPAs) as on March 31, 2004 stood at 1.92 per cent. Its capital adequacy ratio was 12.16 per cent.

Amalgamation of these entities will require formal approvals from the Registrar of Co-operative Societies (Maharashtra), central registrar and the Reserve Bank of India, he added. While working the scheme of amalgamation, the registrar has the power to reduce the interest or rights of the members, depositors, creditors, employees, said sources.

SICB officials are reviewing the financial health of the bank and consider the possible implication of the merger, said a senior official from the troubled bank. Merger with Saraswat Bank will benefit SICB depositors and also expedite the recovery process as Saraswat Bank has a strong legal and recovery department, said the bank official.

The RBI had imposed directive on both SICB and Maratha Mandir Co-operative Bank. The regulator had imposed restriction on both the banks on account of its deteriorating financial health.

The NPAs of SICB's and Maratha Mandir Co-operative Bank as on March 31, 2004 stood at 51.70 per cent and 25.74 per cent, respectively.

The central bank in its mid-term annual policy statement had expressed its intentions of encouraging consolidation in the co-operative sector to promote the growth of strong and viable entities within the sector.