Suvarna may merge with Cosmos Co-operative
In what appears to be a move to pre-empt moratorium and other restrictions from the Reserve Bank of India (RBI), the Shree Suvarna Sahakari Bank (Shree Suvarna) has proposed a merger with Cosmos Co-operative Bank, another Pune-based bank, which is on an aggressive takeover spree over the last couple of years in its attempt to increase its branch network.
Dnyaneshwar Agashe, chairman, Shree Suvarna said that the bank has been suffering from heavy non-performing assets (NPAs) and losses and the decision to merge it with Cosmos was made keeping in mind the interests of the depositors and shareholders.
Currently, Shree Suvarna has 12 branches with a deposit base of Rs 810 crore and advances of Rs 650 crore.
Its NPAs total Rs 125 crore, 13 per cent as against seven per cent maximum allowable under the RBI norms. “The bank is facing significant difficulty in recovering the loans extended to the real estate sector,” Agashe said.
The proposal to merge with Cosmos will be placed before the bank’s (Shree Suvarna) shareholders in the forthcoming annual general meeting to seek their approval.
The board of directors of Cosmos has already approved a resolution to amalgamate Shree Suvarna with itself. Once the shareholders of Shree Suvarna pass the resolution, it will be forwarded to RBI for final approval.
Mukund Abhyankar, chairman, Cosmos Bank said the bank has enough reserves to absorb the losses of Shree Suvarna. Cosmos will also retain all the branches of Shree Suvarna, except those that are in the same location. The bank will also absorb most of the staff of Shree Suvarna, he said.
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