Syndicate Bank

Syndicate Bank

Company type	Public sector bank (nationalised)
Industry	Banking, Financial services
Founded	January 1, 1925 (1925-01-01) in Manipal, India
Founder	Upendra Ananth Pai, T. M. A. Pai, Vaman Srinivas Kudva
Defunct	April 1, 2020 (2020-04-01)
Fate	Merged into Canara Bank
Headquarters	Manipal , India
Area served	India
Products	Commercial banking, financial services
Parent	Government of India (until merger)

Syndicate Bank stood as one of India's longest-established prominent commercial banks, founded by Upendra Ananth Pai, T. M. A. Pai, and Vaman Srinivas Kudva. Originally called Canara Industrial and Banking Syndicate Limited, it was nationalised on 19 July 1969 alongside 13 other major Indian banking institutions. Headquartered in the academic town of Manipal, India, it was merged into Canara Bank on 1 April 2020.

1925–1974

Established in 1925 in Manipal, Udupi, then part of the Madras Presidency, Syndicate Bank was notable for having its headquarters located in a rural setting. Its founders, coming from modest lower-middle-class origins, sought to improve the socioeconomic conditions of the area by focusing on underrepresented sectors such as agriculture and small to medium-sized enterprises rather than urban commerce and industries. The bank commenced operations with a paid-up capital of and concentrated on community-level banking.

In 1928, Syndicate Bank introduced the Pigmy Deposit Scheme, which involved agents collecting deposits directly from farmers and local shopkeepers. By 1960, Pigmy Deposits represented 21% of the bank’s net deposits despite facing criticism from the Reserve Bank of India (RBI). Until RBI banned the practice in 1962, employees were encouraged to act as agents during their free time.

By 1960, Syndicate Bank controlled about 1% of the total banking business share, increasing to 4% by 1975. In 1968, rural branches constituted 32% of its network, surpassing the national average of 22%. Agricultural and small enterprise loans made up 30% of its loan portfolio, significantly higher than the sub-8% offered by other banks. Moreover, 90% of its accounts were small depositors holding less than . Following nationalisation in 1969, branch numbers expanded from 350 in December that year to 700 by December 1974.

1975–2000

In 1975, Syndicate Bank pioneered India’s first Regional Rural Bank (RRB), Prathama Bank, located in Moradabad, Uttar Pradesh. The following year it sponsored Malaprabha Grameena Bank in Dharwad, Karnataka, followed by the establishment of Bijapur Grameena Bank in 1983 and Netravati and Varada Grameena Banks in 1984. By December 1986, the bank operated a network of 1,456 branches.

During the fiscal year 1996–97, Syndicate Bank reported cumulative losses amounting to , but managed to return to profitability with a net income of . Appointed as chairman and managing director in December 1997, K. V. Krishnamurti identified excessive staffing as a major challenge and responded by implementing hiring freezes and voluntary retirement schemes, resulting in a workforce reduction of 2,777 employees by the year 2000. Utilizing its extensive branch network of 1,702 outlets, the bank introduced innovative schemes aimed at attracting low-cost deposits and achieved profits amounting to in fiscal year 1999–2000.

Pigmy Deposits remained a vital component of its deposit base, accounting for 15.6% domestically and 5.6% globally during 1997–98. In October 1999, Syndicate Bank launched its inaugural initial public offering (IPO), issuing 12.5 crore equity shares at par value , which reduced the Government of India’s ownership stake to 76%. By February 2000, staff reductions continued with a total cutback of approximately 2,400 employees over two years.

2001 – 2020

In collaboration with the United Nations Environment Programme (UNEP) in 2003, Syndicate Bank began offering loans specifically for solar lamp purchases. That same year in December, it introduced a sabbatical leave policy providing partial pay as a measure to contain employee expenses.

July 2005 saw Syndicate Bank issue an equity share offering totaling 45 million shares with prices ranging between and . Subsequently in September, four rural banks sponsored by Syndicate Bank across Karnataka merged to form Karnataka Vikas Grameena Bank.

The Pigmy Deposit scheme was reintroduced as Pigmy 2007 in March 2007 while maintaining the original Pigmy scheme from 1928. By March 2015, the bank had expanded its branch network to encompass 3,552 locations.

On August 30, 2019, Finance Minister Nirmala Sitharaman announced that Syndicate Bank would merge with Canara Bank, creating India’s fourth largest public sector bank with assets totaling and a combined branch network of 10,324 outlets. The board of Canara Bank approved this merger on September 13, 2019; final endorsement from the Union Cabinet followed on March 4, 2020. The merger was finalized on April 1, 2020, with shareholders of Syndicate Bank receiving an allotment of 158 Canara Bank shares for every thousand shares held.

Controversies

On 3 August 2014, the Central Bureau of Investigation (CBI) detained Syndicate Bank's Chairman and Managing Director, Sudhir Kumar Jain, along with 11 other individuals, on charges of accepting bribes in exchange for increasing credit limits granted to various companies.