Emerging 'Kerala Model' for Banking

Kerala House moves resolution against SBT merger with SBI: ‘Move detrimental to the interests of State’...

Emerging ‘Kerala Model’ for banking

This refers to the report “Kerala house moves resolution against SBT merger with SBI” (HBL, July 19). Evidently, the joint move by the ruling LDF and Congress-led UDF to oppose SBT merger with SBI is a politically motivated one aimed at some temporary popularity. Let the protest go ‘on record’ for whatever it is worth. For decades, commercial banks in Kerala, including SBT, have been very supportive of all developmental efforts initiated by the state government. Despite a strong deposit base partly augmented by remittances by NRK (non-Resident Keralites) population, banks having presence in Kerala have been trying to maintain Credit-Deposit-Ratio at a decent level.
Only recently, Chief Minister Pinarayi Vijayan was advocating merger of State and District level cooperative banks in Kerala to form a Kerala-based commercial bank and claiming that the proposed bank will occupy the space likely to be created by merger of SBT with SBI. Incidentally, SBT’s dominance is only in South Kerala and its merger will make SBI ensure adequate branch network to perform its role more efficiently.
The state government and RBI should persuade smaller and weak private sector banks in Kerala also to merge with bigger banks to improve efficiency and economies of scale. With all major commercial banks including SBI (post-merger) and the Kerala Gramin Bank (Regional Rural Bank) having overlapping areas of operation and the possible emergence of Kerala Cooperative bank as a ‘commercial bank’ as is being envisioned by the present ruling front, there will be need to rationalise branch network and professionalise the working of all banks in Kerala. More than that, focus of business will have to shift from providing credit to professionally managing state’s savings, of course without any dilution in the carrying out of responsibilities in providing adequate need-based credit. This decade may see the emergence of a new ‘Kerala Model’ in banking service.
M G Warrier, Mumbai


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