Shared responsibility

Crises in India's urban cooperative banks have cast doubt over their dependability, even as reforms strengthen their operations

- NACHIKET KELKAR

T.N. Raghunatha, the secretary of a large housing society in Thane near Mumbai, is a relieved man now. The society's bank account was in the New India Cooperative Bank. In February, the Reserve Bank of India superseded the board of the urban cooperative bank (UCB) and established a withdrawal limit of ₹25,000.

With the bank now being acquired by rival Saraswat Cooperative Bank, the freeze has been lifted. The depositors can now access their deposits, including term deposits.

"From day one, Saraswat bank has given access to funds," said Raghunatha. "There have been no haircuts, no loss of depositors' money."

The reason behind New India bank's troubles was alleged mismanagement. The Mumbai Police has registered a case against the former general manager of the bank for allegedly siphoning off ₹122 crore. Its economic offences wing (EOW) is probing the case and has filed a charge-sheet. The UCB's former chairman Hiren Bhanu, his wife Gauri Bhanu, and another former chairman, Satish Chander, are among those named.

Among various allegations, the EOW has alleged that the bank sanctioned loans to the tune of ₹77 crore to a company without due diligence. The loan accounts were later declared as non-performing assets.

For depositors, the withdrawal limit enforced by the RBI was a problem. Raghunatha's society had significant deposits in the bank. Luckily for him, his society had moved its maintenance account to Saraswat bank more than a year ago.

Saraswat is India's largest urban cooperative bank with a total business of ₹91,814 crore, as of March 31, 2025. The bank's chairman, Gautam Thakur, is confident it will cross ₹1 lakh crore in the current financial year.

"We are the largest in the [urban] cooperative banking space and it is incumbent upon us as the leader to step up whenever we feel it is necessary," said Thakur. "We took interest as there are many synergies we see with New India bank"