The Hindu Business Line : `We feel we must do something for the co-op bank fraternity'

SARASWAT Co-operative Bank has been among the first to approach the Reserve Bank of India with a proposal to take over three weak urban co-operative banks. Mr S.K.Banerji, Managing Director of the multi-state urban co-operative bank, explained the rationale behind the bank's move in an interview to Business Line. Excerpts:

Is Saraswat Bank in the race for acquiring other co-operative banks?

We have made a submission to RBI that we are interested in taking over Maratha Mandir Co-operative Bank, South Indian Co-operative Bank and Nashik People's Co-operative Bank; the idea being that we are the largest urban co-operative bank in the country and that the entire sector is getting flak from a lot of places due to mismanagement by a few co-operative banks, especially due to the fallout of what happened with Madhavapura bank. So, we thought that as leaders we should do something about this and make our presence felt among the people. Therefore we have come forward to take over these three banks.

What about the liabilities of these banks?

We cannot take over the entire losses of these banks. We are not knights in shining armour. But we have given a proposal (we have asked for some cushion) and the RBI is also positive. RBI has given its suggestions and we will take them to our board.

We are also asking the Government to share part of the liabilities. After taking over the banks, we have to incur a lot of expenses as these banks do not have technology back-up.

What are the RBI's views on your proposal?

The RBI has now come out with a policy for mergers and acquisitions in the co-operative sector. And the portfolio of co-operative banks is under the Deputy Governor, Mr V. Leeladhar, who was also the chief of the Indian Banks Association and Chairman of Union Bank of India.

He understands the issues and feels the need to revive the sector. We hope that that the process will start pretty fast.

What is the response from the State Governments for your proposal? Do you require their permission?

We fall under the Multi State Co-operative Act, 2002. We come under the Central Registrar in Delhi, not the State Segistrar. Now these three banks we are proposing to take over are under the State Segistrar.

Now it will require co-ordination between three authorities; the RBI for financials, and as far as the procedural part is concerned, the Central Registrar for our bank and the State Registrars for these three banks.

What you eventually gain from these banks?

We are not doing this entirely for charity. There is a commercial angle to it. We will get the banks' branch network and we will also get a large customer base.

Now these people are in difficulty and we will help them so that they will continue to be with us.

These banks have about 32 branches but some of them may be in the same locality where we have our branches. So I expect an addition of at least 26 branches.

Are you the largest co-operative bank in terms of deposits?

We have 75 branches and 100 offices in five states: Goa, Karnataka, Maharashtra, Gujarat and Madhya Pradesh. We are the only co-operative bank having a foreign exchange licence.

We have a foreign exchange department and our turnover in foreign exchange is Rs 15,000 crore. With such a size, we feel we must do something for our fraternity.

What is the near term outlook for the bank?

Now we have a business of Rs 7,500 crore. In two-three years we expect that to grow to Rs 10,000 crore. By then, we hope to have at least 200 branches with presence in all metros.

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