The Hindu Business Line : Shamrao Vithal eyes three more buys this fiscal

The deal
The estimated cost of acquiring Mahavir and Sauhadra is around Rs 12 crore.
Acquiring Mahavir co-operative bank will give SVC entry into Gujarat and also into the agri sector.

Mumbai , June 11

Shamrao Vithal Co-operative Bank (SVC) has opted for the acquisition route as a growth driver primarily to overcome the restriction imposed on co-operative banks by the Reserve Bank of India on opening new branches.

SVC has identified three more co-operative banks as potential candidates for merger, the bank's Chairman, Mr Suresh Hemmady, said.

The bank has completed the merger of Nashik-based Saptashrungi Co-operative Bank with itself in May 2006 and has received the RBI's approval for amalgamating the Mumbai-based Samasta Nagar Co-operative Bank with itself.

The three other banks SVC is hoping to include within its fold include Bangalore-based Sauhadra co-operative bank, Kolhapur-based Mahavir Co-operative Bank and Manik Chowk based in Baroda. Each of these banks has a branch network of 11 branches, Mr Hemmady said.

SVC has a base of over six lakh customers and presence in cities such as Mumbai, Pune, Aurangabad, Nashik, Mangalore, Bangalore, and Hubli. Currently, it has 30 branches and 10 extension counters. The merger of Saptashrungi and Samasta Nagar will take the number of branches to 40, Mr Hemmady said.

The merger of Saptashrungi cost SVC around Rs 7.25 crore, while the estimate cost for Samasta Nagar is about Rs 14.2 crore.

"For Mahavir we have got the approval from the RBI and are awaiting approval from the Registrar of Co-operative Societies. We have signed a memorandum of understanding with Sauhadra and sent the application to the RBI last week. Saraswat Bank was also interested in acquiring Sauhadra, but they decided to join us. For Manik Chowk we are in the process of doing the due diligence," Mr Hemmady said.

The estimated cost of acquiring Mahavir and Sauhadra is around Rs 12 crore, said a senior official from the bank's finance department. The exact cost of acquiring Manik Chowk is not know yet, as the due diligence is being done, the official said.

"We are sure to recover 90 per cent of the NPAs of these banks as they are backed by good assets. It is just that the bank managements did not try to recover their bad loans," Mr Hemmady said.

More Stories on : Mergers & Acquisitions | Co-operatives

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