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Amalgamation of District Central Co-op Banks with State Ones

Published on May 26, 2021
Current Context: The Reserve Bank of India released guidelines for the amalgamation of District Central Co-operative Banks (DCCBs) with State Cooperative Banks (StCBs).
Amalgamation of District Central Co-op Banks with State Ones
  • The guidelines were framed because some of the state governments approached RBI to perform an amalgamation of DCCBs with StCBs as a two-tier short-term Co-operative Credit Structure.
  • Also, the Banking Regulation (Amendment) Act, 2020 has been notified for the StCBs and DCCBs with effect from April 1, 2021. And the amalgamation of DCCBs with StCBs is to be sanctioned by RBI.
  • The RBI will consider proposals for amalgamation from the states after conducting a detailed analysis of the legal framework.
  • As per the guidelines, there must be an additional capital infusion strategy, assurance regarding financial support, a projected business model with clear profitability and a proposed governance model for the amalgamated bank.
  • The amalgamation has also to be approved by the associated majority stakeholders.
  • The NABARD will also be responsible to examine and recommend the proposal of the state government in line with RBI.
  • At the first step of analysis for amalgamation, an 'in-principle' approval will be accorded subject to fulfilment of certain conditions and then the amalgamation will commence.
  • Then after this, NABARD and RBI may be approached for final approval along with the submission of the compliance report.
  • Static Part: 
    • HQ of RBI: Mumbai
    • Governor of RBI: Shaktikanta Das

Question: 

Q.1 Which organisation to work in line with RBI for the amalgamation of District Central Co-operative Banks (DCCBs) with State Cooperative Banks (StCBs)?
a. Banks Board Bureau
b. NABARD
c. Institute for Development and Research in Banking Technology
d. Indira Gandhi Institute of Development Research (IGIDR)
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