New India Cooperative Bank set to merge with Saraswat Bank; no haircut for depositors

Mumbai: The country's largest urban cooperative bank Saraswat Bank on Tuesday announced its intent to merge the crisis-hit New India Cooperative Bank (NICB) with itself.

There will not be any haircut for any of the over 1.22 lakh depositors of fraud-hit NICB, and all the savings will be protected, Saraswat Bank's chairman Gautam Thakur told reporters.

The NICB depositors, withdrawals by whom are capped at Rs 25,000 per account, will be able to access the full amount once the merger gets effective, Thakur said, adding that he expects the merger to complete by end-September.

"We have voluntarily approached the RBI for the merger of Saraswat with NICB," Thakur said.

Saraswat Bank has merged seven crisis-hit banks with itself in the past and exuded confidence that the merger with NICB will go through, he added.

There will be a scheme of amalgamation with terms and conditions, which will be cleared by shareholders of both banks in about three weeks.

Shareholders of NICB will be given shares in Saraswat Bank in a predetermined ratio, he added.

After the shareholder nod, both banks will go to the RBI for clearance, and the central bank will announce an effective date for the merger, he explained, stressing that he does not foresee any difficulties in getting the clearances.

NICB, which was hit by an alleged Rs 122 crore embezzlement of funds by top management since February and has been under a RBI-appointed administrator since then, had over Rs 1,100 crore of assets as of March 2025, he noted.

Stressing that not every loan made by NICB is not an NPA, Thakur exuded confidence that Saraswat, with an asset size of over Rs 36,000 crore, will be able to absorb the impact of the merger.

Saraswat's gross non-performing assets ratio, which stood at 2.25 per cent in end-March, will move up by a few basis points but will come down eventually, he said.

It will take 18-24 months to turn around NICB, he said, adding that the bank will absorb as many of the 200 remaining NICB employees.

Saraswat will be evaluating all the employees of NICB before absorbing them, and will not take any of the tainted employees or those associated with them.

NICB has 27 branches, including 17 in the financial capital, Thakur said, adding that there are a lot of synergies between the two lenders from the UCB space.

Saraswat Bank has 120 branches in Mumbai, including those 30 which have come from banks merged in the past, Thakur said.

Thakur said the bank is not interested in turning into a commercial lender, and is keen to continue working as a cooperative bank.

It may consider turning itself into a universal bank whenever the statutes permit, he said.