RBI looking at merger proposals of 14 urban co-op banks

The sources from Reserve Bank of India said it is taking into consideration requests for mergers of 14 more urban cooperative banks.

RBI has been persuading consolidation in the urban cooperative banking sector and till now it has allowed merger and acquisition in case of 68 banks.

According to recently released data on the subject, the apex bank told since the issuance of guidelines on mergers of urban cooperative banks in February 2005, it has received 107 proposals for mergers in respect of 92 banks and NOCs has been issued 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"Twenty proposals for merger were rejected, five proposals were withdrawn by banks and the remaining 14 are under consideration," the bank said.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 open way for non-disruptive exit of weak or unviable banks, provide an inorganic route for expansion and facilitate consolidation in the process.

It said that almost consistently banks willingly approach it to obtain NOC for their merger proposal.

RBI sources informed it scrutinize the proposals, form an expert group to go through it before giving approval.

There are around 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 number of these banks are mainly located in states like Maharashtra, Karnataka, Gujarat, Tamil Nadu and Andhra Pradesh.