Co-opted Chaos

Another trend that emerged early in the year was the entry of Maharashtra-based co-operative banks into Gujarat through the merger and acquisition route. Those that grabbed attention were the Co-operative Bank of Ahmedabad, Manekchowk Co-operative Bank and Shri Krishna Sahakari Bank.

Some Gujarat banks also acquired other weak local banks but were generally reluctant to shoulder additional liabilities. Banks from outside Gujarat could afford to acquire banks because this was not going to impact their power balance in the boardroom.

The year to come may bring in more surprises for these banks with the Reserve Bank of India continuing to encourage mergers and acquisitions in a bid to consolidate the co-operative banking sector across the country.