‘Preserve spirit of cooperative banking’

By TheHindu on 16 Apr 2017 | read

14 Apr 2017

Manayath Chandran, who lost his position as president of the Kozhikode District Cooperative Bank following the government’s dissolution of the boards of directors of all district banks, has said the move will ruin the spirit of cooperative banking.

Mr. Chandran told The Hindu that the dissolution was a “purely politically-motivated decision” of the LDF government. It will wreck the rural and farming credit structure in the State, he said.

He claimed that the proposed setting up of the ‘Kerala Bank’ by merging all the 14 district banks and the State apex cooperative bank would only create yet another commercial bank. “The Kerala Bank might replace the erstwhile State Bank of Travancore, but it will wreck the current people-oriented and rural-oriented three-tier cooperative banking structure,” Mr. Chandran said. Easy rural credit will be the biggest casualty, he added.

He claimed that the three-tier structure of primary, district, and State cooperative banks combined sound banking practices with a pro-poor and pro-rural social commitment. This will be missing in the new bank, which will only be carrying out typical commercial banking operations, Mr. Chandran observed.

He said the government had sacked the boards of the 14 district co-operative banks even before the committee constituted to study the possibility of the Kerala Bank had presented its report. “It is still a moot question if the Reserve Bank of India will grant licence to set up such a bank. While district banks and the State apex bank currently possessed RBI licences, primary cooperative societies did not,” he added.

According to Mr. Chandran, the KDC Bank, with 63 branches, is one of the best district co-operative banks. It was the only Class-I bank among the 14 district banks. Its loan portfolio was impressive with huge lendings to the Uralunkal Cyberpark and major road development projects. When merged with the Kerala Bank, the KDC will lose its distinctiveness and its record of socially-committed lending operations, he feared.

The Kerala Bank might replace the erstwhile SBT, but it will damage the people-oriented and rural-oriented three-tier cooperative banking structure.

Manayath Chandran,

Former KDC chief

Special Correspondent