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Kerala Finance Minister T M Thomas Issac, in his budget speech on Friday, said that the government is looking at merging district and state level co-operative banks to form a single bank. In the revised budget for 2016-17, he allocated Rs 10 lakh to set up the committee, which would prepare the the detailed recommendation for this.
"This bank, which will have the largest number of branches in the state, can play an important role in its development," he said.
Sources from the co-operative bank sector said that the details of the plans are not clear at present and a better picture would emerge once the committee is formed and its recommendations are ready.
At present, the Kerala State Co-operative Bank (KSCB) is the apex bank of the short-term credit cooperatives in Kerala. It guides, supervises, coordinates, monitors and controls all the 14 DCB's and through DCBs to over 1,500 Primary Agricultural Cooperative Societies (PACS) in the State, according to the KSCB website.
According to the banking statistics released by the State Level Bankers' Committee (SLBC), as on March, 2016, there were a total of 936 branches working in the co-operative banking sector in Kerala, including 750 branches of district co-operative banks, 20 branches of KSCB and a total of 166 branches of Kerala State Co-operative Agricultural and Rural Development Bank Ltd (KSCARDB).
If merged under one entity, this could be the largest number of branches under one bank, though the State Bank Group, which has six different entities in the state currently, has a total of 1,350 branches.
The combined deposits of the co-operative banks as on March, 2016 were around Rs 59,734.27 crore, of which a majority -- Rs 52,813.23 crore -- is in the District Co-operative Banks, while the deposits in KSCB and KSCARDB were Rs 6,112.13 crore and Rs 808.90 crore, respectively.
Total advances made by co-operative banks were around Rs 36,783.71 crore on March, 2016, including Rs 28152.02 crore made by District Co-operative Banks, Rs 5247.71 crore by KSCARDB and Rs 3383.98 crore by KSCB.
There are a total of 7,122 bank branches in the state, including those of the public sector, commercial and co-operative banks. The total deposits, according to the document, were Rs 4,21,327.42 crore as on March, 2016. The total CASA deposits were about Rs 1,22,049.26 crore during the period. Total advances from the banks in the state put together were Rs 2,69,201.33 crore.
However, the proposal has to go through a long process at various levels to see daylight. A senior official from the co-operative banking sector in the state said that at present there is no clarity on the feasibility and the committee has to come up with the details, to know how it would be implemented.
"It is vaguely mentioned in the budget and we will have to wait for more clarity," said the official on condition of anonymity. One of the issues the proposal may have to face is that while some of the activities are controlled by Reserve Bank of India (RBI), some others, especially those of the KSCARDB, are more related to Nabard, said the official.
In Kerala, the first co-operative bank was registered in 1915, after the then Maharaja of Travancore proclaimed the "Travancore Cooperative Societies Regulation Act". The bank was elevated to the position of State Cooperative Bank after the state was formed in 1956 on linguistic basis and it became the apex bank of approved co-operative banks. It was brought under the control of the RBI from March 1, 1966 and in 1972, the RBI issued license to The Kerala State Co-operative Bank for doing banking business.
