The external committee set up by the Reserve Bank of India on merger of cooperative banks has approved four merger proposals at a meeting held last Friday.
According to a source close to the development, the committee has approved the proposals of both Saraswat Bank and Cosmos Bank to take over Maratha Mandir as both the banks are financially strong enough. A final decision on which bank will take over Maratha Mandir will be taken by the central bank.
The other proposals approved by the committee include Cosmos Bank taking over the Secunderabad-based Premier Cooperative Bank; Ahmedabad-based Kalupur Cooperative Bank taking over Utkarsh Mahila Cooperative Bank in Gujarat; and Prime Cooperative Bank of Baroda taking over Baroda Industrial District Cooperative Bank.
Once the proposals are approved by the external committee, the RBI will give its no-objection after going through the proposals.
The proposals were submitted to the external committee after the due diligence report on the financial viability of the merger was approved by the RBI. The Registrar of Cooperative Societies is also learnt to have given an in-principal approval to the proposals.
The key point is that these mergers will not get any subsidy from the Deposit Insurance and Credit Guarantee Corporation as per the clauses of the new vision document on cooperative banks circulated by the RBI.
All deposits up to Rs 1 lakh are insured by the DICGC and in case a bank is liquidated, DICGS gives money to affected depositors.The new clause, however, has no objection if the mergers receive financial help from their respective state governments.