Mumbai-based Maratha Bank could be merged with Cosmos Bank

The development will come as a big relief for MSBL’s 99,695 depositors who have been facing withdrawal restrictions since 2016

Mumbai The Mumbai-based Maratha Sahakari Bank Limited (MSBL) is likely to be merged with the Cosmos Bank, Pune. Anand Katke district deputy registrar of the cooperative commissionerate in Pune confirmed that the proposal for the merger is with the Reserve Bank of India, and at a recent meeting the high powered committee (HPC) of the RBI raised some queries which Cosmos Bank needs to clarify before the merger is finalized.

Initially the restrictions were for six months but they have since been extended by invoking provisions of Section 35A of the Banking Regulation Act, 1949 (Mint)

The development will come as a big relief for MSBL’s 99,695 depositors who have been facing withdrawal restrictions since 2016 when the RBI restricted its banking operations in the lights of ballooning non-performing assets. Initially the restrictions were for six months but they have since been extended by invoking provisions of Section 35A of the Banking Regulation Act, 1949. The section allows the RBI, “To intervene to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company; or to secure the proper management of any banking company generally.” The latest restriction were communicated on February 28 this year, when the RBI decided to extend the restrictions until May 2022.

“In this case, the merger plan has been finalized but it is yet to get a go ahead from the RBI. Merger plan is important with respect to the depositors as it explains how and when the depositors will get back their hard earned money. It is basically the time frame and rate of interest that depositors will get once the bank is merged with another. All this has to be approved by the RBI of course,” Kakte explained. Earlier this year, in January 2022, the government approved the merger of Punjab & Maharashtra Co-operative Bank Limited (PMC Bank) with Unity Small Finance Bank Limited (Unity Bank).

Milind Kale, chairman, Cosmos Bank also confirmed the development. “We are awaiting a decision from the RBI for merging MSBL with Cosmos Bank, which is likely to happen soon,” Kale told Hindustan Times.