1

Mergers & Acquisitions

Of
Co-Operative
Financial Institution.

1+1=11 2
 INTRODUCTION TO
CO-OPERATIVES.
A Co-operative Society is defined as "an
autonomous association of persons united
voluntarily to meet their common economic,
social, and cultural needs and aspirations through
a jointly-owned and democratically-controlled
enterprise." Co-operatives "are based on the
values of self-help, self-responsibility, democracy,
equality, equity and solidarity. In the tradition of
co-operative founders, co-operative members
believe in the ethical values of honesty, openness
, social responsibility and caring for others."

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 TYPES OF CO-OPERATIVE SOCIETY

• Agricultural Co-operative. • Food Co-operative.

• Building Co-operative.
• Credit Union.
• Consumers' Co-operative.
• Co-operative Banking.
• Co-operative Federation.
• Co-operative Union.
• Housing Co-operative.
• Mutual insurance.
• Retailers' Co-operative.
• Social Co-operative.
• Utility Co-operative.
• Worker Co-operative.

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 INTRODUCTION TO
CO-OPERATIVE BANKING.
Cooperative banks, also called mutual savings and
loans, exist in most parts of the world. They offer
financial services on a cooperative basis.
Like credit unions, cooperative banks are owned by their
customers and follow the cooperative principle of one
person, one vote. Unlike credit unions however,
cooperative banks are often regulated under both
banking and cooperative legislation. They provide
services such as savings and loans to non-members as
well as to members. Many cooperative banks are traded
on public stock markets, meaning that they are partially
owned by non-members.

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 INTRODUCTION TO
CO-OPERATIVE BANKING.
Cooperative banking systems are also usually
more integrated than credit union systems. Local
branches of cooperative banks elect their own
boards of directors and manage their own
operations, but most strategic decisions require
approval from the central office. Credit unions
usually retain strategic decision-making at a local
level, though they share 'back-office‘ functions like
access to the global payments system by federating.

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 CRITICISM.
Cooperative banks are often criticized for
dilution of cooperative principles. Principles 2-4
of the Statement on the Co-operative Identity
assert that members must control both the
governance systems and capital of their
cooperatives. A cooperative bank that raises
capital on public stock markets creates a second
class of shareholders who compete with the
members for control. In some circumstances, the
members may lose control. This effectively
means that the bank ceases to be a cooperative.
Accepting deposits from non-members can also
lead to a dilution of member control.

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Statement on the Co-operative Identity.

The Statement on the Co-operative Identity,

promulgated by the International Co-operative
Alliance (ICA), defines and guides co-operatives
worldwide. It contains the definition of a co-
operative as a special form of organization, the
values of co-operatives, and the currently
accepted cooperative principles that direct their
behaviour and operation. The Statement with the
latest revision of the cooperative principles was
adopted by ICA in 1995.

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 India
The origins of the cooperative banking movement in
India can be traced to the close of nineteenth century
when, inspired by the success of the experiments related
to the cooperative movement in Britain and the
cooperative credit movement in Germany, such societies
were set up in India. Co-operative banks are an important
constituent of the Indian Financial System.
In the Indian Banking System, Co-operative banks
in India are known for its rural reach and form the
primary financiers of agricultural based activities
including farming, cattle, milk, hatchery, personal
finance etc. along with some small scale industries
and self-employment driven activities.

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 Co operative Banks in India are registered under
the Co-operative Societies Act. The cooperative bank is also
regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative
Societies) Act, 1965.
The Anyonya Co-operative Bank in India is considered
to be the first cooperative bank in Asia.
In the context of aggressive competition and
uncertainly, coupled with limitless opportunities, on the eve
of Globalization, Co-operative Banks in India, were exposed
to the realities of change.
Today, the combined deposits of nearly 2090 Co-
operatives Banks is nearly One Lac Crore, which is almost
10% of the aggregate deposits of the commercial world.
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11
 INTRODUCTION TO SARASWAT BANK
• On September 14, 1918, the Saraswat co-op banking society was
found. It is the largest cooperative bank in Asia.
• In 1933, the society was converted into a full fledged Urban co-op
bank.
• In 25 years since inception, the bank established a strong
foundation in terms of its membership, resources, assets & profits.
• By 1942 the bank was fulfilling all the needs of its customer.
• During the late fifties, the bank had established 5 branches within
Mumbai & 1 each at Pune & Belgaum.
• In the year 1977-78, the banks’ gross income crossed the Rs. 3
crore mark for the first time.
• In 1988 the bank was conferred with Scheduled status by RBI
• In the last two decades the bank has witnessed a steady growth in
the business.

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 ORGANISATION STRUCTURE.
BOARD OF DIRECTORS
• Shri K. V. Rangnekar(Chairman).
• Shri M. P. Barde (Vice-Chairman).
DIRECTORS
• Shri N. R. Warerkar, Shri R. K. Patkar, Shri M. K. alias Baba Parulekar, Shri A. V. Dubhash
,Shri S. V. Deshpande Shri S. S. Sanzgiri Shri S. K. Sakhalkar Shri S. S. Shirodkar, Shri H. M.
Rathi.
MANAGING DIRECTOR
• Shri S.K.Banerji.
STATUTORY AUDITORS
• M/s. Kulkarni and Khanolkar, Chartered Accountants.
LEGAL ADVISORS
• Dr. B. R. Naik, M/s. Little and Company ,Shri A. V. Sabnis, Shri G. G. Desai Shri k. M. Naik
CONSULTANTS
• Shri S. N. Sawaikar ,Shri B. L. Patwardhan.
BANKERS
• State Bank of India Wachovia Bank, N.A.
• Bank of India American Express Bank Ltd.
• HDFC Bank Ltd. Standard Chartered Bank Ltd.
• ICICI Bank Ltd. Maharashtra State Co-operative Bank Ltd.

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 THE SARASWAT CO-OPERATIVE BANK LIMITED
(A SCHEDULED BANK)

REGISTERED OFFICE : ‘Madhukosh', S. V. Sovani Path,

Girgaum, Mumbai-400 004.

CORPORATE OFFICE : Mittal Court, 'A' Wing,

First Floor, Vidhan Bhavan Marg,
Nariman Point, Mumbai-400 021.

Website : www.saraswatbank.com

DATE OF REGISTRATION : September 14, 1918.

NO. AND DATE OF RBI LICENCE : ACD-MH-220-P Dated 27.08.1980.

AUDIT CLASSIFICATION : `A’ (Since 1933)

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TOTAL BUSINESS
(RS in Crore)

15
NET PROFIT (RS in Crore)

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 Merger Acquisition & Takeover.
• Merger is the combination of 2 or more companies into a single company
where one survives and the other loses its corporate existence. Generally
the company who survives is the buyer. The survivor acquires the assets
as well as liabilities of the merged company or companies. In commercial
usage, absorption of one or more companies with another is termed as a
merger. No new company is formed. However they say that a true merger
in the legal sense occurs when both the firms dissolve and fold their
assets and liabilities into a newly created third entity.
• Acquisition: An acquisition is the purchase by one company of a
controlling interest in the share capital of other existing companies. This
means that both the firms retain their corporate identity.
• Takeovers: A takeover bid is the acquisition of shares carrying voting
rights in a company with a view to gaining control over the management.
The takeover process is unilateral and the offeror company decides the
maximum price.

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 Saraswat Bank takes over Nasik People’s
Cooperative Bank
As part of its expansion plan to strengthen its base in North
Maharashtra, Saraswat Co-operative Bank Ltd (SCBL), has
acquired the financially troubled city-based Nasik People's Co-
operative Bank (NPCB) with 14 branches. With the acquisition of
NPCB, the total number of branches of the Sara swat Bank has
gone up to 141. NPCB, which was founded in 1923, had deposits
of Rs 124 crore, with 1,30,478 deposit accounts. It was in the red
and its loss stood at Rs  31 crore. Kishore V Rangnekar, chairman,
Sara swat Co-operative Bank Ltd, said, "The merger of Nasik
People's Cooperative Bank with the Sara swat Bank will help us
extend our base in North Maharashtra. With this merger, we
expect to touch Rs 2,000 crore business turnover from Nasik
district alone by the end of the financial year 2010-11.

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 MERGER OF SCB
• Saraswat Cooperative Bank (SCB) has made a fresh application to
the Reserve Bank of India (RBI) to acquire the South Indian Co-op
bank.
• The losses of South Indian Cooperative Bank (SICB) is in the range of
Rs 70-80 crore.
• SCB has asked for financial support from the government to acquire
the bank as the losses were too high.
• Government helps to absorb 50% of losses rest needed to be
funded.
• Meanwhile SICB was asked not to provide fresh loans, making
investment selling & disposing properties without prior approval
from SCB
• SCB has received positive indication of support from the regulator
& the govt. DICGC may step in to neutralize the losses.

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 OTHER CO-OPERATIVE MERGERS.
• Amravati Cooperative Bank and Sirushi
Cooperative Bank in Karnataka.
• Maratha Mandir Cooperative Bank, Mandvi
Cooperative Bank, Nasik Peoples Cooperative
Bank, Annasaheb Karale Janata Sahakari Bank
and Murgharajendra Sahakari Bank.
• Sangli Co-operative Bank and Suvarna
Sahakari Bank.

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 SOCIAL GOOD VIA MERGERS
In the process of these mergers, we have also achieved a great deal
of social good to a large number of people as follows:
(a) We have restored the deposits of 5,90,619 hapless depositors back to
them fully.
(b) We have safeguarded and secured the jobs of 875 Employees.
(c) We have nurtured and resupported the businesses and small industries
dependent on these Banks.
(d) We have made some recoveries and converted Non Performing Assets
into Performing Assets and thus have contributed in a small way to wealth
creation.
(e) We have helped restore the confidence of public in the urban co-
operative banking. No wonder a few other major players in this sector
have quickly emulated our role model.

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 CONCLUSION
Bank has now in all 55 ownership premises including three open
plots which are now under our ownership and possession. At the time of
takeover of the banks, these properties were cumulatively valued at Rs.
42.55 crore. In the next four years the bank has plans to buy two-three
more banks. “The bank have a target to acquire 10 lakh more customers
by 2011. For this, the bank will have to acquire a few more banks and we
are in talks with 2-3 troubled banks.
In the next 10 years the bank has set a mark of achieving Rs
1 lakh crore business. There have been rumours' that bank might convert
into a private sector but the bank has denied the rumours' and said its
board has no plans to convert the bank into a private sector one in the
near future. “We will be maintaining the co-operative status until we
reach that size (of a private sector bank).

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 CREDITS
• KARAN DAVE 11
• NIRAJ JAGDA 20
• VAIBHAV NARULA
• NADIR
• JASMINE