Saraswat Bank, India’s largest urban cooperative bank, has announced on Tuesday that it plans to merge the crisis-hit New India Cooperative Bank (NICB) with itself.
Saraswat Bank’s chairman Gautam Thakur has assured that there will not be any haircut for any of the over 1.22 lakh depositors of fraud-hit NICB, and all the savings will be protected, PTI reported.
Depositor protection and access to funds
Currently, the NICB depositors face withdrawal limits of ₹25,000 per account due to the crisis.
Once the merger is finalised, depositors will be able to access the full amount, Thakur said, adding that he expects the merger to complete by end-September.
Thakur also said the bank has no immediate plans to convert into a commercial lender, and is keen to continue working as a cooperative bank.
However, he indicated that the bank might consider becoming a universal bank whenever the statutes permit, he said.
Merger timeline and process
“We have voluntarily approached the RBI for the merger of Saraswat with NICB,” Thakur said.
Saraswat Bank has merged seven crisis-hit banks with itself in the past and showed confidence that the merger with NICB will also go through.
After the shareholder nod, both banks will go to the RBI for clearance, and the central bank will announce an effective date for the merger. In this process, the shareholders of NICB will be given shares in Saraswat Bank in a predetermined ratio.
NICB’s financial status and turnaround strategy
NICB has been under an RBI-appointed administrator since February due to an alleged ₹122 crore embezzlement of funds by top management. As of March 2025, the bank held over ₹1,100 crore in assets, Thakur told PTI.
Stressing that not every loan made by NICB is an NPA, Thakur is confident that Saraswat, with an asset size exceeding ₹36,000 crore, will absorb the impact of the merger.
Thakur estimated that it will take around 18-24 months to turn around NICB.
What will happen to NICB employees?
According to Thakur, the bank will absorb as many of the 200 remaining NICB employees after evaluating them. However, any employees associated with the fraud will not be retained.
NICB has 27 branches, including 17 in Mumbai, whereas Saraswat Bank has 120 branches in the city, including 30 which have come from banks merged in the past, the news agency reported.
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