The Reserve Bank of India (RBI) has approved the amalgamation of Karnataka’s National Co-operative Bank with Maharashtra’s Cosmos Co-operative Bank Limited. The scheme will come into effect on January 6, 2025, from which date the branches of National Co-operative Bank, Bengaluru, will operate as branches of Cosmos Co-operative Bank.
The National Co-operative Bank, one of Bengaluru’s oldest banks, faced financial difficulties, prompting the RBI to impose restrictions under Section 35A of the Banking Regulation Act, 1949, on July 25, 2023.
Between July 2023 and June 2024, the bank recorded non-performing assets (NPA) amounting to Rs 161.98 crore. Its deposits dropped from Rs 1,482.03 crore in FY 2022–23 to Rs 789.08 crore as of March 31, 2024, while loans and advances decreased from Rs 908.06 crore to Rs 667.44 crore in FY 2023–24. The total business volume stood at Rs 1,456.52 crore.
The bank’s financial health further deteriorated, with net NPAs reaching 40.75% and a Capital to Risk-Weighted Assets Ratio (CRAR) of -9.08% as of March 31, 2023. The credit-deposit ratio stood at 61.27%, and the bank reported a net loss of Rs 220.89 crore for FY 2023–24. The National Co-operative Bank currently operates 13 branches across Karnataka.
In contrast, Cosmos Co-operative Bank has shown consistent growth and resilience. For FY 2023–24, the bank reported a net profit of Rs 384 crore and declared a 15% dividend for its members.
The bank’s total business volume grew by Rs 4,662 crore (15.16%) to reach Rs 35,408 crore. Deposits increased by Rs 2,587 crore to Rs 20,216 crore, while advances rose by Rs 2,075 crore, totaling Rs 15,192 crore.
Cosmos Bank’s recent strategic expansions included mergers with Mumbai-based Maratha Sahakari Bank and Sahebrao Deshmukh Sahakari Bank, adding 18 branches and increasing its Mumbai presence to 50 branches. The bank’s total network now spans 170 branches across seven states.
The amalgamation is expected to stabilize the financial condition of the National Co-operative Bank while enhancing Cosmos Bank’s footprint in Karnataka.
Please tell us about the rate of interest paid on all kinds of deposits by Cosmos Bank vis a vis National Cooperative Bank