RBI Approves Merger of National and Cosmos Co-operative Banks

The Reserve Bank of India (RBI) has approved the merger of 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 National Co-operative Bank will operate as part of Cosmos Co-operative Bank. The approval comes after a series of restrictions imposed on 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 from 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 co-operative banking sector.