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Mergers & Acquisitions | 24 July 2013

Saraswat Bank To Acquire Rupee Cooperative

by Tilak Devadiga
Saraswat Bank To Acquire Rupee Cooperative
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Saraswat Cooperative Bank, India's largest cooperative bank is looking to acquire Pune based Rupee Cooperative Bank. This would be in continuation of the inorganic growth strategy that the cooperative bank is pursuing.

Rupee Bank which was put under directions by the Reserve Bank of India due to its weak financial position earlier this year forms an attractive target due to its loyal customer base and the fact that most of the branches are owned by it.

The bank established in 1912 mainly operates in Maharashtra with a present branch network of 36 with 5 extension counters.

The bank due its poor financial health was put under strict RBI restriction. According to the RBI directions, Rupee Co-operative Bank’s depositors are allowed to withdraw not more than R 1,000 of the total balance held in every savings bank or current account or any other deposit account.

Further, without prior approval in writing from the RBI, the bank cannot grant or renew any loans and advances, make any investment or incur any liability — including borrowal of funds and acceptance of fresh deposits.

The bank also cannot disburse or agree to disburse any payment, whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets.

Sarawat Bank established in 1918, has been actively acquiring distressed urban cooperatives. It had acquired 8 loss making UCB’s including Maratha Mandir Co-operative Bank, Mandvi Co-operative Bank, Nashik Peoples Co-operative Bank, South Indian Co-operative Bank.

SCB has 242 branches and 168 ATMs spread across six States - Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Goa and Delhi. It has deposits and loans aggregating about R 22,000 Cr and R 14,000 Cr, respectively.

The RBI has issued regulation to promote merger and amalgamation of viable UCBs and the exit of unviable entities to revive the distressed UCB sector.

Maharashtra, the State with the largest concentration of UCBs, accounted for the maximum number of mergers. Of the total mergers that took place between 2005 and 2012, Maharashtra had a 61% share, followed by Gujarat with a share of 19 per cent and Andhra Pradesh, with 8%.

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