RBI Approves Merger of National and Cosmos Co-operative Banks

RBI Approves National Co-op Bank Merger

The Reserve Bank of India (RBI) has approved the merger of the National Co-operative Bank (Bangalore) with Cosmos Co-operative Bank (Maharashtra), effective from January 6, 2025. This decision is part of ongoing consolidation efforts within India’s banking sector.

Following the merger, the branches of the National Co-operative Bank will operate as part of Cosmos Co-operative Bank. The approval comes after a series of restrictions imposed on the National Co-operative Bank due to its weak financial performance.

Key Points

RBI Approval 

• The merger of National Co-operative Bank Ltd., Bangalore, with Cosmos Co-operative Bank Ltd., Maharashtra, has been sanctioned by the RBI.

Effective Date 

• The merger will come into effect on January 6, 2025.

Legal Framework 

• The merger is sanctioned under the powers conferred by Sub-Section (4) of Section 44A and Section 56 of the Banking Regulation Act, 1949.

Branch Operations 

• Post-merger, all 13 branches of National Co-operative Bank in Karnataka will function as branches of Cosmos Co-operative Bank.

Previous Mergers 

• In FY24, Maratha Sahakari Bank and Sahebrao Deshmukh Sahakari Bank were also merged with Cosmos Bank.

• RBI Restrictions on National Co-operative Bank: In July 2023, the RBI imposed restrictions on the National Co-operative Bank, limiting deposit withdrawals to Rs 50,000 per account due to its weak financial health. These restrictions were extended up to January 24, 2025.

Merger Rationale 

The merger aims to strengthen the financial health and operational reach of the participating banks, contributing to the broader consolidation within India’s cooperative banking sector.

In Conclusion

The merger of the National Co-operative Bank with the Cosmos Co-operative Bank aligns with the RBI’s efforts to strengthen India’s cooperative banking sector. By integrating a financially weak institution with a stronger entity, the move ensures stability, protects depositors, and enhances banking services.

This consolidation step reflects the RBI’s commitment to reinforcing the cooperative banking framework and improving overall financial resilience.