RBI Clears Merger of Four Co-operative Banks Into Two: What Changes for Customers

The RBI has approved two co-operative bank amalgamations effective mid-December 2025. The move aims to strengthen balance sheets while ensuring depositor safety and service continuity.

RBI Approves Co-operative Bank Amalgamations Effective December 15

The RBI approved the merger of four co-operative banks into two entities on 12 December 2025, assuring customers that deposits and services remain fully protected.

The Reserve Bank of India has cleared a Co-operative banks merger involving four urban co-operative banks, consolidating them into two stronger institutions. The amalgamations came into force from 15 December 2025, following separate RBI notifications issued on 12 December 2025. The approvals were granted under Section 44A(4) read with Section 56 of the Banking Regulation Act, 1949, which governs mergers of co-operative banks.

What Is the Issue: Why RBI Is Pushing Co-operative Bank Consolidation

The RBI has been encouraging consolidation in the co-operative banking sector to improve financial stability, governance and customer protection. Smaller co-operative banks often face challenges related to capital adequacy, compliance and technology upgrades.

By approving this Co-operative banks merger, the RBI aims to create stronger entities with better risk management and operational efficiency. The central bank clarified that such amalgamations are depositor-centric and are designed to ensure uninterrupted banking services.

Details of merger approvals are published through RBI notifications available on rbi.org.in → Notifications → Co-operative Banks.

Main Developments: Which Co-operative Banks Are Merging

The RBI approved two separate voluntary amalgamations involving banks based in Gujarat.

Approved Co-operative Bank Mergers

Following the mergers, all branches of the transferor banks ceased independent operations and began functioning as branches of the respective transferee banks. Customers were automatically migrated without the need for new account documentation.

According to the RBI notifications, all assets, liabilities, deposits and loan accounts have been transferred seamlessly.

How the Merger Impacts Customers and Depositors

RBI has clarified that depositors face no risk due to the amalgamations. Account holders will continue to access existing banking services, including deposits, loans and digital facilities.

Customer Impact at a Glance

The central bank assured that customers do not need to take any action regarding their accounts or deposits. The only visible change will be the bank’s name.

Coverage of similar RBI-approved co-operative bank mergers:

• Times of India: https://timesofindia.indiatimes.com/city/mumbai/saraswat-bank-completes-new-india-bank-merger-account-access-begins-monday/articleshow/123049029.cms
• Economic Times: https://economictimes.indiatimes.com/markets/stocks/news/saraswat-bank-gets-rbi-nod-for-merger-with-nicbl/articleshow/123032404.cms

Previous Developments: RBI’s Broader Push for Co-operative Bank Stability

This Co-operative banks merger fits into RBI’s long-term strategy to clean up and strengthen the urban co-operative banking sector. Over the past few years, RBI has relied on mergers rather than liquidation to protect depositors of weak banks.

In its RBI Annual Report 2024–25, released in August 2025 and available on rbi.org.in → Publications → Annual Reports, the central bank noted that consolidation improves resilience and governance standards in co-operative banks.

RBI has also imposed penalties and corrective actions on non-compliant co-operative banks to improve discipline and depositor confidence.

For regulatory context on RBI’s oversight of co-operative banks:

LoansJagat: What Stakeholders Are Saying

Shikhar Aggarwal, Chairman of BLS E-Services, said consolidation can strengthen co-operative banks if executed carefully, highlighting the need for smooth IT integration, staff alignment and uninterrupted customer service during transition.

Industry observers believe stronger co-operative banks will be better positioned to support financial inclusion, small borrowers and government schemes.

Conclusion

RBI’s approval of the latest co-operative bank mergers reinforces its depositor-first approach. If executed smoothly, consolidation could strengthen trust and stability in the co-operative banking system.