The Reserve Bank of India (RBI) has approved the merger of National Co-operative Bank, headquartered in Bengaluru, Karnataka, with Cosmos Co-operative Bank, based in Pune, Maharashtra.
The merger will take effect this week.
According to India’s central bank, it sanctioned the Scheme of Amalgamation under Sub-Section (4) of Section 44A, alongside Section 56 of the Banking Regulation Act, 1949.
Following the merger, the 13 branches of National Co-operative Bank in Karnataka will operate as branches of Cosmos Co-operative Bank.
National Co-operative Bank has faced financial difficulties in recent years, prompting the RBI to impose restrictions in July 2023. These included a withdrawal limit of INR50,000 ($582.5) per account due to the bank’s weak financial position.
The restrictions were extended multiple times and are currently set to remain in force until 24 January 2025.
Cosmos Co-operative Bank has been actively consolidating its operations. In FY24, it absorbed Maratha Sahakari Bank and Sahebrao Deshmukh Sahakari Bank, further expanding its presence.
In a separate announcement, the RBI has granted HDFC Bank permission to acquire up to a 9.5% aggregate holding in Kotak Mahindra Bank, AU Small Finance Bank, and Capital Small Finance Bank.
The approval, issued last week, is valid for one year, until 2 January 2026.
HDFC Bank sought the approval as its group entities, including HDFC Mutual Fund, HDFC Life Insurance Company, and HDFC ERGO General Insurance Company are likely to exceed the prescribed 5% limit for aggregate holdings under the RBI’s directions.
Although HDFC Bank itself does not intend to invest directly in these banks, the approval allows its group entities to maintain aggregate holdings within the 9.5% cap during the normal course of their operations.
The application for increased investment limits was submitted to the RBI on 20 September 2024, in compliance with regulatory requirements.
