Kerala is a state which has a long history of formal and informal
financial institutions. Among the provinces and States of Indian Union
before independence, Travancore and Cochin topped the list in the range
of area and population served by a commercial bank branch. The early
institutions were predominantly of the unit banking type. Travancore
had 275 joint stock banks in 1932-33 (Oommen, 1976'). Even in the
present day banks, chit funds and money lenders CO-exist in Kerala. But
Banks
occupy
a
predominant
position
among
the
financial
intermediaries. They are the leaders in mobilizing deposits and
dispersing credit. A review of the progress of commercial banks is
relevant in the context of on going financial sector reforms. It is most
appropriate to examine the impact of economic policy on the
performance of banking sectors in Kerala before making any
conclusions about the benefits and shortcomings of reforms.
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.