The proposed takeover of Karnataka’s Bengaluru-based scam-hit Sri Guru Raghavendra Sahakara Bank Niyamitha (SGRSBN) has faced a regulatory setback after the Reserve Bank of India declined to approve proposals submitted under the Small Finance Bank (SFB) framework.
The bank had earlier floated an Expression of Interest (EOI) inviting prospective investors to explore a takeover and potential conversion into a Small Finance Bank. According to sources familiar with the process, multiple proposals were received.
In a recent communication, RBI stated that the proposals were examined in accordance with the prevailing guidelines for grant of an SFB licence but were not found feasible. The communication does not provide further details on the grounds of non-approval.
Administrator Ajit Krishnan Nair confirmed the development. Sources indicate that entities such as Jupiter Money and Dhanvarsha Group, among others, had expressed interest. It is also learnt that a few leading urban cooperative banks were informally approached for due diligence.
Sources further suggested that revival options within the cooperative banking framework may also be examined. No formal regulatory position has been communicated in this regard. The bank continues under administrative oversight while alternative restructuring avenues are being evaluated.
The bank has been under regulatory directions since 2020, with extensions issued periodically. The Directions were last extended until May 10, 2026. RBI has clarified that the extension and/or modification of the Directions should not be construed as an indication of its satisfaction with the bank’s financial position.
As per details contained in the EOI document, the bank’s accumulated losses stood at Rs 2,268 crore as of March 31, 2025, with deposits of Rs 1,940 crore from nearly 38,000 depositors. The bank has reportedly repaid Rs 714 crore through insurance claims settled by Deposit Insurance and Credit Guarantee Corporation (DICGC) and Rs 207 crore from its own resources.
Talking to Indian Cooperative, one of the depositors, V. Harish, said, “We have found that the mortgaged documents worth Rs 572 crore, showing nil encumbrances, have not been mentioned in the bank’s financial statements or in the EOI. Further, we have filed a petition in the High Court of Karnataka seeking to be included in the financial statements”.
