Kerala Bank: LDF's manifesto promise becomes a reality as HC dismisses pleas

With the Kerala High Court dismissing a batch of petitions challenging the incorporation of Kerala Bank, the new entity has become a reality on Friday, informed state cooperation minister Kadakampally Surendran. A government notification for setting up the bank was issued on Friday evening after the high court dismissed 21 cases against the government move to amalgamate 13 District Cooperative Banks (DCBs), barring Malappuram district cooperative bank, with the Kerala State Cooperative Bank (KSCB) to pave way for Kerala Bank. 

With this, the Pinarayi Vijayan-led LDF government is close to fulfilling its promise from the 2016 assembly election manifesto. The Reserve Bank of India (RBI) had given its nod for setting up Kerala Bank on October 7. The RBI approval, however, was subject to the outcome of the cases challenging the provisions in the ordinance promulgated by the Kerala government to circumvent district cooperative banks’ resistance towards their amalgamation for the formation of Kerala Bank pending before Kerala High Court. The state government overcame this hurdle with the high court order on Friday. 

With the official notification, administrator governance in the district cooperative banks would come to an end. Instead, a state-appointed interim governance committee, comprising Cooperation Secretary Mini Antony, Finance and Resources Secretary Sanjeev Koushik and Kerala State Cooperative Bank Managing Director Rani George, will take over the administration. The interim administrative panel will convene without much delay and make arrangements for running the banks without any functional glitches. The maximum tenure of the interim administration is a year from the date of formation of the bank. However, the minister stated that all due processes will be undertaken to hand over the administration to a democratic governance committee as soon as possible. 

Minister Surendran stated that the first general body meeting of the amalgamated entity will be convened in December itself. The post-merger bylaw amendments, including governance of the new bank and functioning, will be the agenda during the first general body meeting. On December 6, the state government will hold a day-long event to celebrate the coming into existence of Kerala Bank. 

The services and products offered by the state and district cooperative banks have already been standardised. The government plans to adopt these fully from January 1, 2020. The state has already decided to appoint Union Bank of India general manager P.S. Rajan as the CEO of Kerala Bank. It is expected that Rajan will be able to assume charge in January. 

Surendran added that decisions on cadre integration of bank employees will be taken only after discussions with employee organisations and is expected to be complete by March 31, 2020. He assured that a favourable decision will also be taken regarding on-contract employees and daily-wage workers. Training of employees will be completed in six months and a clear policy will be framed for salary revision, promotion and transfer of employees. 

The new logo and colour scheme of Kerala Bank will be released with RBI's consent. The government also plans to renovate and bring in new amenities to existing buildings of state and district cooperative banks. The policy of Kerala Bank will be unveiled soon, the minister said. 

He expects to complete the allocation of tenders to standardise core banking offerings of the state and district cooperative banks within a month. The government targets to complete integration of core banking facilities by September 2020. 

Owing to opposition from DCBs, especially the Malappuram district cooperative bank, against the proposed amalgamation, the Kerala government had taken to the ordinance route for the formation of Kerala Bank. This, coupled with the high court cases, had significantly delayed the formation of Kerala Bank.

Once it comes into being, Kerala Bank will have the state’s largest banking network.