Kerala Cooperative Bank

The latest ordinance promulgated by Kerala Government has objectives much beyond restructuring of the management of District Cooperative banks(DCBs) in the state. It will, hopefully, pave the way for formation of Kerala Cooperative Bank to be formed through merger of the Kerala State Cooperative Bank and all DCBs in the state, a dream project of the present Chief Minister of Kerala which found a mention in CPM’s Election Manifesto for the last assembly elections.
Coming closely on the heels of merger of State Bank of Travancore with SBI the formation of a big local bank gains significance. If the new bank is able to gain scheduled bank status and the political leadership allow the bank to function with efficiency and professionalism, a history of sorts will be made in the cooperative sector and may emerge as yet another ‘Kerala Model’ for other states to follow.
Cooperatives across the country had more than their due share of  problems post-demonetization. While primary(urban) cooperative banks  whose functioning is similar to mini-commercial banks are regulated and supervised by RBI, the three/two tier structure of cooperatives comprising State and District Cooperative Banks and thousands of primary cooperative societies have multiple regulatory and supervisory oversight involving RBI, NABARD and Registrar of Cooperative Societies(State Government).
It is comforting to find that Kerala has understood the urgency in finding a solution to a problem that has arisen due to continued neglect of an institutional system which has been serving the semi-urban and rural areas of the country, with all constraints. There are no alternative conduits to ensure  banking service to their clientele in semi-urban and rural areas.
The cooperatives need to survive, and issues like politicization, inadequate skills or problems arising from the dual control of cooperatives by Centre and states need to be resolved once and for all. There is need for cooperation among the judiciary, central and state governments and cooperatives themselves in solving the immediate problems the clientele of cooperatives are facing today. Sorting out hurdles in the formation of Kerala Cooperative Bank quickly and amicably will go a long way in reinventing the real role of cooperatives in India.
At this stage Centre should come forward and support the Kerala initiative and play a proactive role in revamping cooperatives.

M G Warrier, Mumbai


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