Satish Marathe, Director on the RBI Board does not approve of an amalgamated Kerala Bank which the state government aims to set up after merging all the 14 District Cooperative Banks of the state.
Reacting to a piece of media report that the RBI has approved the merger of 14 district cooperative banks into a single entity- the Kerala State Co-Operative Bank and that the state government is going to issue an ordinance in this regard soon, Marathe said there was a Board Committee meeting on 26th September which I did not attend and thus have no concrete information “Let the minutes of the meeting come”, he added.
It is not going to be easy for the Kerala govt to get its idea translated into reality even after the RBI nod, experts opine. There are court cases against the govt move to merge co-op banks, they point out. One of the petitioners happens to be a BJP MP, among others. The idea of an amalgamated bank has been opposed by many cooperators as well for they see in it a move to stifle the rural credit system.
If one has to reduce interest multiplication by reducing the tiers of co-op banking it is better to dissolve the apex bank and strengthen the district co-op banks. Marathe felt that merging profit-making banks into a loss-making entity is not a good idea. According to a report, out of 14 DCCBs in the state, 12 DCCBs are doing well and earning profits. There is no point piggyriding a loss making bank on the profit making ones, he added.
Talking of the long term pernicious effect of this move Satish Marathe said concentration of power into a single entity is theoretically not good. Besides, with a limited reach the so called Kerala Bank would find it hard to connect to remote areas, he underlined. The apex bank has not even 20 per cent branches compared to DCCBs and in the given scenario it would be tough for it to operate universally in the state.
These 14 District Cooperative Banks have a network of about 300 branches. Over 64 lakh customers are associated with them. There are about 6 thousand people working in these banks. The state government has dissolved the boards of these District Cooperative Banks and appointed administrators to oversee their activities.
Earlier, Sahakar Bharati had threatened to take up the issue of merger with the central government. They even wrote letters to RBI and Nabard on the issue. Sahakar Bharati has called upon all cooperators to oppose this anti-cooperative move launched by the communist government.
The issue of splurging by a poor state on the task force had earlier caught media attention. The nine-member task force received Rs 10 lakh every month as salary. In one incident, the government had spent Rs 2.5 lakh for conducting a meeting of the task force. The meeting was held at a hotel in Kochi to discuss the services to be offered by Kerala Bank after its formation, reported the online magazine.
The fact that there will be less numbers of points of vested interest in a merged entity, decision making can be expected to be more policy oriented and policies are also fairer with better harmony across the State.