Saraswat Cooperative Bank, India's largest urban cooperative lender, today said it will take a "considered view" on turning into a commercial bank, following a RBI panel's recommendation to allow bigger ones from the sector change their character.
"This is only a draft report and the final report is yet to come in. Whatever gets final, we will take a considered view on it and take it to the board and then the general body before arriving at a decision," Saraswat Bank chairman S K Sakhalkar told PTI over phone.
The High Powered Committee on urban cooperative banks (UCBs) headed by RBI Deputy Governor R Gandhi has been recommended giving the option to UCBs with business size of Rs 20,000 crore or more into commercial banks.
Large Multi-State Urban Cooperative Banks (MS-UCBs) having a presence in more than one state, dealing in forex and participating in the money market and payment systems could be systemically important, the panel said.
"Their failure may have a contagion effect and unsettle the UCB sector. The systemic risk could be minimised if the large UCBs convert themselves into commercial banks as the statutory framework and prudential regulations with respect to commercial banks are more stringent and structured than those for UCBs," it said.
It can be noted that the Saraswat Bank management had first broached the idea of changing the character in 2010, saying such a move will be beneficial for capital raising, especially given its ambitious expansion plans.
However, Sakhalkar today hinted that the shareholders of the 1918-incorporated bank did not appreciate such a move after the media reports came out.
"There is a section of shareholders which supports the move, while there are some who have fears," Sakhalkar said, adding that at present each of the 1.10 lakh shareholders is treated equally irrespective of the number of shares held, which is anyway capped at 2,500 per individual.
