A bank is a financial institution that accepts deposits from the public and creates credit.[1] Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords. Banking in its modern sense evolved in the 14th century in the prosperous cities of Renaissance Italy but in many ways was a continuation of ideas and concepts of credit and lending that had their roots in the ancient world. In the history of banking, a number of banking dynasties – notably, the Medicis, the Fuggers, the Welsers, the Berenbergs, and the Rothschilds – have played a central role over many centuries. The oldest existing retail bank is Banca Monte dei Paschi di Siena, while the oldest existing merchant bank is Berenberg Bank.
The Reserve Bank of India has given its final nod to the state government for the formation of the Kerala Bank, an ambitious project mooted by the LDF government amidst protests and resistance from the opposition. The RBI approval, however, comes with a rider that the consent given for the bank would be subjected to the outcome in a number of cases pending before Kerala High Court, challenging the provisions in the ordinance promulgated by the state government to circumvent district cooperative banks’ resistance towards their amalgamation for the formation of Kerala Bank. which the government proposes to make possible by amalgamating 13 district co-operative banks. Malappuram district cooperative bank had raised objections against the amalgamation plan which to an extent contributed to the delay in the formation of Kerala Bank, one of the projects the LDF highlighted in its election manifesto in 2016. Since several district cooperative banks refused to toe the line, the government tried to circumvent the bottleneck by promulgating an ordinance as per which two third majority is not mandatory for the amalgamation of district banks into a single bank. One of the 19 conditions put forward by the RBI at first was that each of the district banks should convene meeting of shareholders and the amalgamation plan should be ratified with two third majority. There was sharp criticism from the opposition against the government move, but the RBI has finally given its stamp of approval to the ordinance route taken by the state government. The government also courted controversies when it decided to take over the liabilities of the district banks that voted in favour of amalgamation. At several points, the government faced stiff resistance from many co-operative banks and the opposition even approached the RBI with a request to deny permission for Kerala Bank. Petitions petition filed by bank director boards under UDF against the Kerala Bank formation is currently pending with the high court. Meanwhile, Kadakampally refused to say when the Bank would become functional. The RBI’s approval is valid only till March 31, 2020. The minister said the government would give one more chance to Malappuram district bank to reth