Another "Kerala Model": Kerala Bank gets RBI nod
RBI gives final nod for formation of Kerala Bank | Cooperatives: Changing with times
https://timesofindia. indiatimes.com/city/ thiruvananthapuram/rbi-gives- final-nod-for-formation-of- kerala-bank/articleshow/ 71511411.cms
Kerala cooperatives have learned their lessons the hard way and finally decided to get mainstreamed complying with the regulatory requirements.
Welcome initiative by Kerala. My media response:
October 10, 2019
October 10, 2019
Kerala Bank gets RBI nod*
Since the beginning of last century when cooperative movement emerged on
the Indian scene, cooperatives have been playing a proactive role in the
economic development and social life of Kerala. Attempts by vested interests to
capture and manage cooperative institutions and resultant efforts to circumvent
regulatory and supervisory requirements did affect the growth of this ideal institutional
system, off and on, since certain provisions of the Banking Regulation Act,
1949 were made applicable to cooperative societies. The problems faced by
cooperative banks during demonetization (2016) and the recent failure of the
Mumbai-based urban cooperative bank (PMC Bank) can be traced to such intervention
by external forces.
The conditions subject to which RBI has given the ‘go ahead’ to Kerala
bank relating to capital adequacy, management and institutional set-up are very
liberal. The stipulation that administration and management will be guided by
the present guidelines for management of urban cooperative banks may need review
even before the commencement of business by Kerala Bank, in the context of the
recent PMC Bank failure.
In all probability, coming into being after merger of Kerala’s own State
Bank of Travancore with SBI, Kerala Bank will be the biggest cooperative bank
in India and soon get categorized under “too big to fail” category. That adds
to GOI’s and RBI’s responsibility to ensure that the dual control (state
government having a major role in management matters and RBI’s regulatory and
supervisory role) does not adversely affect the institution’s smooth
functioning.
M G Warrier, Mumbai
*Published in The Hindu Business Line on October 11, 2019:
RBI nod for Kerala Bank
https://www. thehindubusinessline.com/ opinion/letters/letters-to- the-editor/article29648866.ece
If the link opens please read my response on Kerala Bank.
M G Warrier
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