Thiruvananthapuram: In response to the alarming financial instability plaguing Kerala's cooperative banking sector, Kerala Bank has rolled out a comprehensive action plan aimed at reviving struggling institutions and safeguarding public trust. The initiative targets the immediate restructuring of loss-making cooperative banks, with a strategic blueprint under development to stem the tide of mounting losses.
According to preliminary assessments, as many as 863 primary cooperative banks across the state are currently operating at a loss, collectively burdened with a staggering deficit of ₹7,042 crore. A key concern driving the intervention is the risk of insolvency should losses exceed a bank’s capital reserves, it would be unable to fully repay depositors, potentially triggering a sector-wide credibility crisis.
Kerala Bank’s action plan seeks to avert such a scenario through targeted inspection and reform. Financial and management experts will lead the evaluation process, working alongside key personnel from the affected institutions, including presidents, secretaries, board members, and senior staff. These collaborative teams will be central to diagnosing issues and implementing corrective measures.
The inspection will be conducted in three batches, each comprising 120 personnel. In every batch, 10 cooperative banks will be scrutinized in detail. The first round of assessments is set to begin in the second week of July at the Cooperative Staff Training Center in Manvila. Thirty banks that have been flagged for urgent financial intervention will be prioritized under the initial phase of the program. If this phase succeeds, the project will expand into a broader second stage.
Beyond financial assistance from Kerala Bank, the revival strategy also envisions leveraging various schemes provided by both the central and state governments. Each bank’s operational health will be thoroughly evaluated to identify the root causes of its losses, with tailored corrective actions applied accordingly. The initiative aims not only to restore fiscal discipline but also to reinvigorate confidence in Kerala’s cooperative banking system a cornerstone of the state's rural financial infrastructure.