Government would initiate steps to get permission in principle from the Reserve Bank of India and the NABARD for the initiative.
Thiruvananthapuram: Moving a step forward in the formation of the proposed Kerala Co-Operative Bank, the state cabinet of the CPI(M) led LDF government today approved in principle an expert committee report in this regard.
The committee, headed by M S Sreeram of the Indian Institute of Management (IIM) Bangalore, had submitted the report to Chief Minister Pinarayi Vijayan with detailed recommendations for its formation on April 28.
As per the proposal, the 14 district co-operative banks will be integrated with the State Co-operative bank for the formation of Kerala Co-operative Bank, to be known as Kerala Bank.
With the cabinet giving its nod, government would initiate steps to get necessary permission in principle from the Reserve Bank of India and the NABARD for the initiative, an official release said here today. The report had recommended completion of the process for formation of the bank in 18 months.
The present three-tier cooperative would be converted into a two-tier system. The existing primary agriculture cooperative societies would be retained as such. The new Bank would be able to function by levying interest on financial products sans exorbitant service fees, the release said.
With the merger of State Bank of Travancore with its parent SBI, the Kerala based bank had ceased to exist and the new bank can resolve that shortcoming, it said.
The state of Punjab has also started steps to integrate co-cooperative banks on similar lines of Kerala. Maharashtra and Uttar Pradesh governments have also conducted enquiries with the Kerala state co-operation department to know about the new Bank, the release said.
The committee report had asked the government to sanction Rs 1,000 crore either as budget allocation or 'long-term subordinated debt' or grant for capital investment support. It also recommended constitution of a Kerala State Financial Regulatory Authority to supervise financial institutions under the co-operative sector.