The Hindu Business Line : Saraswat Bank offers to take over 2 co-op banks

Pune, June 19 Saraswat Co-operative Bank Ltd is willing to take over the management of the sick Shree Suvarna and Rupee Co-op banks and effect a merger once the two entities become profitable, Mr Eknath Thakur, Director, and Chairman, merger committee, Saraswat Bank, has said.

A proposal to this effect has been submitted to the Reserve Bank of India a month ago, he said.

“We are prepared for total management, on an irrevocable basis, of both Rupee Co-op and Suvarna banks,” Mr Thakur said stating that an immediate merger would involve taking over losses to the tune of Rs 780 crore and turn Saraswat Bank into a sick bank. “We will function as a merged bank, but the actual merger will happen only after the two banks turn profitable,” Mr Thakur said adding that Saraswat Bank had given the RBI an undertaking that the offer was irrevocable.

If the proposal goes through, around 40 branches of Rupee and 12 branches of Survarna would operate as full-fledged banks with a banner declaring ‘Under the management of Saraswat Bank’. All deposits would be fully restored, and dues cleared from the first day itself, Mr Thakur promised. If necessary Saraswat Bank would offer funds in the capacity of ‘lender of last resort’ to them, he added.

Ray of hope

The development brings a ray of hope for depositors of Suvarna Bank, which has been under the RBI moratorium since September 2006. Despite efforts to recover losses, the total loss as of today is around Rs 280 crore. Indian Overseas Bank has also been in the race for it, but the take-over of a co-operative bank by a commercial bank did not augur well for the co-op sector, and Mr Thakur said he was opposed to it.

Over the last few years, Saraswat Bank has taken over five sick co-op banks in Maharashtra and turned them round. “We will take around three years to turn Suvarna Bank around,” Mr Thakur said.

Rupee would take around five years, though they would make an effort to make that happen by 2012, which was its centenary year, he said.

More Stories on : Mergers & Acquisitions | Co-operatives | Maharashtra

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Saraswat Bank offers to take over 2 co-op banks