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India's top three urban co-operative banks — Saraswat Co-operative Bank, Cosmos Co-operative Bank and Shamrao Vithal Co-operative Bank — may soon spread their wings across the country and give private sector banks tough competition.
Following the Reserve Bank of India's nod for expanding its area of operations, the Mumbai-headquartered Saraswat Bank is drawing up plans for an all-India footprint.
Currently, the area of operation of India's largest UCB is restricted to six States — Maharashtra, Goa, Karnataka, Gujarat, Madhya Pradesh and Delhi. It has a network of 217 branches.
“We have already applied to the RBI for issuing licences at 96 locations. Our target is to reach a business (deposits plus advances) level of Rs 50,000 crore by March-end 2016 from Rs 27,313 crore as on March-end 2011,” said Mr Eknath Thakur, Chairman, Saraswat Bank.
The RBI is amenable to granting permission to well-managed and financially sound UCBs to expand their area of operation. Hitherto, UCBs could not expand their operations beyond a few States.
Cosmos Bank (as on March-end 2011, total business, Rs 15,521 crore; and branches, 119) and Shamrao Vithal Bank (total business, Rs 10,512 crore; and branches,105) have sought the regulator's permission to expand their area of operations.
The conditions
The RBI will allow an urban co-operative bank to become a pan-India bank provided it has, among others, a minimum capital-to-risk-weighted assets ratio of 9 per cent, a minimum Grade II classification, net worth of Rs 500 crore or more, according to Mr Shashikant Bugde, Chairman, Cosmos Bank.
“We have applied to the RBI to have a pan-India presence. Currently, we have branches in Maharashtra, Gujarat, Madhya Pradesh, Karnataka and Andhra Pradesh.
“Once the regulator gives us permission, we will expand our operations to Delhi, Goa, Tamil Nadu, Rajasthan and Tripura,” he said.
Shamrao Vithal Bank plans to open branches in all States once the central bank's permission comes through, said Ms Himangee Nadkarni, Chief Financial Officer.
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