Saraswat Bank plans to buy six co-operative banks

Source :The Hindu:pti:SEP 18 :2010

Having set a target to quadruple its total business to Rs.1 lakh crore by 2021, city-based Saraswat Co-operative Bank is eyeing to acquire up to six banks in the near future, a top official said.

“In all, over 66 banks have approached us. Twenty one of them are under our scanner, five are designated candidates and one will be acquired immediately,” bank's Chairman Eknath Thakur told reporters here on Friday.

Mr. Thakur mentioned two banks — Vadodara's Anyonya and Ichalkaranji Urban Cooperative Bank — as targets but said Saraswat's plans were meeting resistance because of legal issues in both cases.

Number of branches

The bank, which operates 203 branches now, also aspires to grow the total number of branches to 1,000 by 2021 through ‘organic and inorganic' growth, according to Mr. Thakur.

The biggest hurdle, Mr. Thakur said, was in the regulatory laws governing co-operative banks. “Capital is our biggest issue. We cannot hit the stock market... Raising Tier—I capital is the constraint. I am sure regulations will evolve and there will be newer instruments,” he said.

Saraswat Bank had suggested to the Reserve Bank of India to allow it to sell shares at a premium to investors, Mr. Thakur said, adding during exit, the bank could return the premium on the face value of the share the investor had paid earlier.

However, senior bank officials were tight-lipped when pointed out that such a system will not incentivise the investor, who has more profitable options to park his money which ensures in higher capital appreciation.