Photo: AFP
Kochi: Reserve Bank of India (RBI) has filed a counter-affidavit in High Court requesting to cancel an amendment brought in the Kerala Cooperative Societies Act to facilitate the merger of Malappuram District Cooperative Bank with Kerala Bank.
RBI pointed out that the amendment violates the union government’s Cooperative Society Act. Further, RBI argued that the government moved forward with the merger without receiving written permission as required per the Deposit Insurance and Credit Guarantee Corporation (DICGC) Act. Therefore, the RBI requested Kerala High Court to cancel the amended section 74H of the Kerala Cooperative Societies (KCS) Act.
The affidavit has been filed in response to a writ petition challenging the merger filed by UA Latheef MLA, president of the Malappuram Cooperative Bank.
Amending the Kerala Cooperative Societies (KCS) Act enabled the state government to approve the merger of district cooperative banks without prior approval from RBI. However, RBI pointed out that depositors will lose insurance coverage as it has been merged without their previous sanction.
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