Kerala Bank to Introduce Rating System for Primary Cooperative Banks

Kerala Bank is gearing up to implement a rating system for primary cooperative banks across the state. This rating system will evaluate these banks based on criteria such as financial discipline and performance. Key factors influencing the rating will include performance efficiency, financial stability, and technological advancement.

This initiative comes as a response to the pressing need to restore trust and transparency in these banks, particularly amid ongoing financial challenges and difficulties in meeting investment obligations. While Kerala Bank serves as the apex body for primary cooperative banks in the state, it lacks direct control over them. Currently, the State Department of Cooperation oversees audits and inspections of these institutions.

Through the rating system, Kerala Bank aims to indirectly promote financial discipline among primary cooperative banks. Banks receiving higher ratings will receive increased financial support and opportunities to collaborate on Kerala Bank projects. This approach is anticipated to serve as a monitoring mechanism, enhancing efficiency and minimizing errors.

Primary banks will be incentivized to improve their ratings, as this will not only enhance their performance but also positively impact their business prospects. Kerala Bank CEO, George M Chacko, emphasized that while this initiative is not legally mandated, it represents a concerted effort to establish standards and discipline in financial transactions within the cooperative banking sector.

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