The State government is likely to get the Reserve Bank of India’s (RBI) go-ahead for the formation of the Kerala Cooperative Bank by this month-end.
Sources privy to the developments told The Hindu that as things stand now, the government has crossed almost all major hurdles in setting up the bank and the most significant among them was a positive recommendation of the National Bank for Agriculture and Rural Development (NABARD) to the RBI for granting in-principle clearance for the government’s proposal.
The NABARD is learnt to have forwarded a positive report to the RBI and now the report is being processed for according the approval that will help to expedite the process by this month end. Recommendation of NABARD is the primary level clearance for merging the 14 district cooperative banks with the Kerala State Cooperative Bank, sources said.
The RBI had approved a similar merger proposal of the Jharkhand State Cooperative Bank with the seven district central cooperative banks in its purview last year. That decision had come as a morale booster to the State government and also instilled the confidence that the RBI will not shelve its proposal too.
Once the RBI grants the in-principle approval on the basis of the recommendation of NABARD, it would make the task easy for the government to form the new bank. It would have a two-tier system comprising about 3,825 branches. All assets and liabilities of the district cooperative banks will be transferred to the new bank.
The conditions stipulated by the RBI as well as NABARD will be applicable to the new entity too and it will continue to offer all services provided by the cooperative banking network at present. The RBI will grant final approval only after the new bank starts functioning after fixing the capital adequacy ratio and on the basis of other mandatory norms.
The government has approved the request for proposal for the core banking solutions for the new bank. The RBI will grant the final clearance only after evaluating the functioning of the new bank and setting up the capital adequacy ratio, non-performing asset ratio, and such other norms. The new bank is expected to meet the requirements of the common man without any service charge.
