Saraswat Co-op Bank seeks to become a private bank

To overcome the inherent restrictions in the co-operative banking model on raising capital, the country's largest co-operative bank is mulling the option of converting into a private sector bank. The Mumbai-headquartered Saraswat Co-operative Bank has apparently started working towards this end. A bigger play in the banking landscape by seeking the Reserve Bank of India's permission to spread its wings across the country – currently, it has presence in Maharashtra, Gujarat, Madhya Pradesh, Karnataka, Goa and Delhi – and giving stock options to employees are in the works. At present, co-operative banks can strengthen their core capital only by issuing shares at face value, ranging from Rs 10 to Rs 100, and plough back of profits. The capital market is off-limits for them. This restriction on bolstering core capital is proving to be a stumbling block for growing assets. The only urban co-operative bank that has converted (in 1995) into a private sector bank so far is the Development Co-operative Bank. This bank was re-christened as Development Credit Bank.