Cooperative sector plans to raise Rs9,000 crore within 30 days

THIRUVANANTHAPURAM: The state’s cooperative credit sector has embarked on a deposit mobilization drive with a target to raise Rs9000 crore.

While the Kerala State Cooperative Bank (KSCB) or Kerala Bank, the largest entity from the cooperative sector, has been entrusted with the task of raising Rs2000 crore, the other entities from the sector together will have to raise the remaining Rs7000 crore.

The deposit mobilization drive that begins today (Jan 10, Wednesday), will remain open for a month, until February 10, 2024. The deposit drive also aims to increase the pace of Navakerala Development process in the state as well as to attract the youth into the thriving cooperative system of Kerala.

Apart from Kerala Bank, Kerala State Cooperative Agricultural and Rural Development Bank Ltd, Primary Cooperative Agricultural and Rural Development Banks, Service Cooperative Banks, Farmers Service Cooperative Banks and other entities from the cooperative sector will take part in the campaign, according to a circular issued from the Cooperative Department recently.

Each district has been tasked with separate deposit targets with Kannur being assigned for the largest slice of Rs1,300 crore and the smallest at Rs250 crore, falling on Idukki district.

A tall challenge before the entities from the credit cooperative sector will be about meeting the 30 per cent current account savings account (CASA) target assigned by the department, as CASA deposits attract far lower interest rates compared with term deposit rates.

Currently, Kerala Bank enjoys a CASA rates as low as 14 per cent which means a 30 per cent CASA for an entity from the cooperative sector could mean really challenging.

In fact, corporate accounts help build the volume of CASA accounts in a bank and this could be the predominant reason why cooperative banks lag behind the regular commercial banks in the number of CASA accounts

Banking system in the country as a whole has been on a deposit hunting drive as a pent up demand for loans stemmed from the prolonged Covid period puts pressure on the banks for increased deposits requirement.