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Mergers & Acquisitions

OfCo-Operative

Financial Institution.

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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.• Building Co-operative.• Credit Union. • Consumers' Co-operative.• Co-operative Banking.• Co-operative Federation.• Co-operative Union.

• Food Co-operative.• 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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IndiaThe 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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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. NaikCONSULTANTS • 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)

TOTAL BUSINESS(RS in Crore)

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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