Saraswat, Cosmos to seek universal banking licences, says report

Two leading urban co-operative banks (UCBs) — Saraswat Co-operative Bank and Cosmos Co-operative Bank — are set to seek the Reserve Bank of India’s (RBI) approval to convert into full-fledged commercial banks, as per a Business Standard report.

Saraswat Bank is likely to submit its application to the RBI by the second half of 2020-21, while Cosmos Bank is currently working to strengthen its information technology systems, particularly on the payment and remittances front, the report added.

The two banks are looking for universal banking licences as RBI regulations for UCBs are almost on a par with regular banks. The RBI has said that UCBs with deposits of Rs 100 crore are to set up a board for management with the board of directors carrying out due diligence for their appointment, the BS report said. These internal structures will add another layer of bureaucracy, even as it slows down decision-making, it added.

Conversion into small finance banks is also not an option due to inherent curbs placed on this model, which essentially would mean winding down businesses, it makes sense to directly apply for a universal banking licence, the BS report said.

Set up in 1918, Saraswat Bank had a total business of Rs 61,811 crore in 2018-19, while Cosmos Bank's (established 1905) was at Rs 26,952 crore, the report added.