RBI considering merger proposals of 14 urban co-op banks

MUMBAI: The Reserve Bank is considering requests for mergers of 14 more urban cooperative banks, the apex bank has said.

RBI has been encouraging consolidation in the urban cooperative banking sector and has so far allowed merger and acquisition in case of 68 banks.

In a recently released data on the subject, the apex bank said since issuance of guidelines on mergers of urban cooperative banks in February 2005, it had received 107 proposals for mergers in respect of 92 banks and that it had issued NOCs in 68 cases as of November this year.

"Twenty proposals for merger were rejected, five proposals were withdrawn by banks and the remaining 14 are under consideration," the bank said.

According to the apex bank, mergers and acquisitions pave way for non-disruptive exit of weak or unviable banks, provide an inorganic route for expansion and facilitates consolidation in the process.

It said that almost invariably banks voluntarily approach it to obtain NOC for their merger proposal.

RBI said it examines the proposals, gets an expert group to go through it before giving approval.

There are 1,770 urban cooperative banks in the country with total deposits of Rs 1,38,000 crore and advances of Rs 89,000 crore. A large majority of these banks are located in states like Maharashtra, Karnataka, Gujarat, Tamil Nadu and Andhra Pradesh.