District cooperative banks can’t accept NRI deposits
Thiruvananthapuram: After the formation of Kerala Bank, Reserve bank of India is reviewing the licences issued to district cooperative banks. As a part of this, RBI has cancelled the licence to receive NRI deposits. District cooperative banks of Kozhikode, Wayanad and Idukki have been cancelled.
Kerala Bank is functioning under the licence of state cooperative bank. Hence, RBI is of the stance that modern banking licences can be maintained only according to work efficiency.
RBI informed that the present status of state cooperative bank doesn’t allow it to receive NRI deposits.
Kozhikode district cooperative bank has over Rs 90 crore NRI deposit. It has been instructed to return the amount within six months. It also has been instructed not to receive any new deposit.
The NRI deposit scheme of Kozhikode district cooperative bank with own IFS Code and RTGS facility was highly popular. Money could be transferred from anywhere with foreign exchange facility to Kozhikode district cooperative bank.
For all state–district cooperative bank branches to be merged with Kerala Bank, branch licences are to be taken as per RBI instruction. If this guideline is not relaxed, it would affect the Kerala Bank.
Inorder to obtain licence for NRI deposit, RBI have put forward certain guidelines – the bank should be in profit for the past three years, capital adequacy should be at least 10 percent, A grade should be obtained in audit certification and NABARD inspection report for past three years. At present Kerala Bank can’t meet these criteria.