The Reserve Bank of India (RBI) has given its final nod to the amalgamation of 13 district cooperative banks (DCBs) with the Kerala State Cooperative Bank to form proposed Kerala Bank.
All district banks, excluding the Malappuram District Cooperative Bank had approved the scheme of merger proposed by the State government during their respective general body meetings. The government may also offer one more opportunity to the Malappuram bank’s general body to give approval to the scheme.
The merger approval now depends on the High Court for a case challenging the amendment to Section 14(A) of the Kerala State Cooperative Societies Act. The government would have to complete the requisites mandatory for the merger and submit a compliance report to the central bank before March 31, 2020.
Besides, the RBI has directed the State government to abide by the provisions of the KSCS Act and rules closely at every stage, fortify the capital of the KSCB to guarantee persistent networth and observance to capital to risk-weighted assets ratio (CRAR) norms, a standard assessment to assess balance sheet strength of banks, post-merger.
It had also said that the State government would have to time and again permeate added capital and also ensure a well-defined governance structure by amending the KSCS Act.
The government submitted a compliance report to the apex bank in March and the final approval for the merger of 13 district banks was accorded. Minister for Cooperation Kadakampally Surendran conveyed the agreement on the implementation of the procedures within the predetermined time frame.