Bank merger process will be completed by March 31

KOCHI: With the RBI’s in-principle approval coming through, the task force set up to monitor the formation of Kerala Bank is now confident of finishing the process without much delay. “With the RBI’s nod and the instructions to be followed being laid out while merging the District Cooperative Banks (DCB) with the Kerala State Cooperative Bank (KSCB), we believe a majority of the work is done now,” said V R Raveendranath, chairman, Task Force on Kerala Bank.

The RBI nod includes the requirement that the state should follow the Kerala Cooperative Societies Act and Rules in effecting the merger which is ought to be completed by March 31, 2019. This includes a merger resolution to be passed with a two-thirds majority in each DCB general body. Since the majority of the 14 DCB general bodies having a UDF majority, it won’t be easy to get the resolution passed. A source said the government may bring out an ordinance that allows it to bypass the requirement.

The task force has already submitted its proposal to the government regarding the structure, HR policies and technology solutions for initiating the merger. “It’s up to the state government to sign-off on the proposals and issue contracts to most competitive firms. Not to have an effect on the RBI’s final approval, we expect the seamless integration of the software with over 800 branches to take more time than the stipulated RBI timeline,” said Raveendranath.

On the alleged issue of DCBs being kept in the dark regarding their future, the task force will soon start coordination sessions with the DCBs to bring them up to task regarding the merger. Post-merger, the RBI licence issued to the KSCB will continue to be valid. The branches of the district banks will transform into KSCB branches. Consequently, the KSCB should apply to the RBI for licences for these branches. The district banks have to surrender their licences to the RBI, which has set 18 other conditions for establishing the bank.