UDF continues to pick holes in Kerala Bank plan

Writes to RBI, Nabard to scrutinise merger resolutions

The Opposition United Democratic Front on Sunday threw another road block on the Left Democratic Front government’s moves to set up the Kerala Bank by amalgamating the 14 district cooperative banks (DCBs) with the Kerala State Cooperative Bank.

Leader of the Opposition Ramesh Chennithala urged the Reserve Bank of India (RBI) and the National Bank for Agriculture and Rural Development (Nabard) to scrutinise whether the merger resolutions passed by the DCBs conformed to the Central Act and the various stipulations imposed by the two banking regulators.


Mr. Chennithala, in identical letters to the RBI Governor and the Nabard chairman, highlighted the attempts of the State government to dilute one of the main stipulations regarding the merger resolutions.

As per an amendment to the Kerala Cooperative Societies Act, the two-thirds majority norm has been reduced to a mere simple majority for passing the merger resolutions.

Norm violation

Stating that such moves amounted to blatant violations of the RBI-Nabard conditions, Mr. Chennithala said that five of the district cooperative banks could not pass the resolution with two-thirds majority.

The Malappuram DCB failed to secure even a simple majority to push the resolution through.

“This was indicative of the resistance of the people towards the delayering of the cooperative banks,” he said.

Part-time administrators

He also questioned the status of the general body meetings conducted by part-time administrators.

The amendment to the Kerala Cooperative Societies Act introducing the simple majority norm was made only after the RBI gave in-principle sanction along with its conditions for final clearance for Kerala Bank.

Mr. Chennithala also expressed doubts whether the government was well prepared for the integration of the bank, including issues related to the information technology platform, service conditions and assimilation of staff and the status of the administrators appointed by the government.

He also submitted a 20-point highlights of how the delayering of the cooperative banks would be harmful to the agriculture credit sector and the impact that the KSCB’s higher NPA level would have on the bottomline of the DCBs.

Usurping power

He suspected that the move to establish the Kerala Bank was intended to help the current ruling establishment to usurp power and control the banks.

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Printable version | Apr 7, 2020 4:06:28 AM |

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