Kerala Bank requests financial aid of Rs 800 cr from govt
Thiruvananthapuram: The Kerala Bank has requested the state government to hand over a financial aid of Rs 800 crore. It is learned that the Kerala Bank has approached the government to gain the capital deposit proposed by the Reserve Bank of India.
The Kerala Bank administrative committee has sought financial aid at a time when the government is facing serious financial crisis.
RBI had approved Kerala Bank directing the government to issue financial aid as a grant or share for ensuring capital adequacy.
Hence, the government should give Rs 800 crore to boost the capital as per the accounts of the financial year 2019-2020. As per RBI direction, Capital Adequacy Ratio should be at 9 percent and Non-Performing Assets ratio should be below 5 percent.
At present, Kerala Bank’s Capital Adequacy Ratio marked at 7.30 percent and Non- Performing asset ration marked at 11.79 percent. It is observed that the bank is facing a loss of Rs 776 cr.
Capital Adequacy means the capital needed for a bank measured in terms of the loans disbursed by it. Profit, capital share and reserve fund are measured to determine capital adequacy.
If the Kerala Bank fails to meet the capital adequacy norms, it will face more challenges in future. RBI is yet to issue numerous licenses to Kerala Bank.
However, Kerala Bank is still functioning as 13 banks and one state cooperative bank even after 10 months from its establishment.
In October 2018, RBI had directed the bank to complete the core banking formalities immediately. But the bank failed to follow this direction.