Banking (including co-operative banking)

Banks are the dominant financial intermediaries in developing countries. Bank deposits form a preponderant portion of the financial savings of the house hold sector, and bank credit is the most important source of finance.

Bank Branches

The Banking group-wise branch network in Kerala as per State Level Bankers Committee (SLBC) data the total number of bank branches as on March 2017 is 7,312. Of the total number of branches, 62 per cent of the branches are in semi-urban areas, 31 per cent of the branches are in urban areas and there are only 7 per cent of the total bank branches in the rural areas. The data of banking group wise branch network is given in Table 1.13. Despite being a small State, Kerala has an extensive bank network and accounts for 4.6 per cent of the total scheduled commercial bank branches operating in the country. Kerala has a total of 6,337 scheduled commercial bank branches as on March 2017 as against 6,166 bank branches as on March 2016. During the period 2016-17, 171 new branches were opened in the State. The total number of bank branches increased to 6,376 by the end of June 2017. In terms of number of branches, Kerala has the largest number of bank branches among the semi-urban areas in the country (Appendix 1.40). The number of ATMs in the State has increased from 8,966 in March 2016 to 9,182 in March 2017.

Table 1.13
Banking Group-wise Branch Network in Kerala
Banking Group Number of Branches
Rural Semi-urban Urban Total Percentage
State Bank Group 77 967 326 1370 18.74
Nationalised Banks 101 1545 609 2255 30.84
RRB 51 525 39 615 8.41
Private Sector Bank 148 1469 475 2092 28.61
Co-operative Bank 135 26 819 980 13.40
Total 512 4532 2268 7312 100

Source: State Level Bankers Committee, Kerala, March 2017


As per SLBC data, the total bank deposits (includes Public Sector Banks and Private Sector Banks) in Kerala as on March 2017 is 410,492 crore which is 13.52 per cent increase over 2015-16. Out of this, 258,143 crore is domestic deposit and 152,349 crore is NRI deposit. The growth rate in domestic deposit is 14.23 per cent as compared to 7.46 per cent in 2015-16 and the growth rate of NRI deposit is 12.34 per cent as compared to 23.73 per cent in 2015-16. Domestic deposit constitutes 63 per cent of total deposits of the State. The major share of deposit comes from domestic deposit. (Appendix 1.41) The growth of bank deposits in Kerala is shown in Figure 1.14.

Figure 1.14
Growth of Bank Deposit in Kerala from 2003-2017

Source:SLBC, March 2017

Deposits in Scheduled Commercial Banks

As per RBI data, the total bank deposits in scheduled commercial banks (includes SBI and its associates, nationalised banks, Private sector banks, foreign banks, regional rural banks and small finance banks) in Kerala in 2016-17 has increased by 13.48 per cent to 412,503 crore as compared to 363,511 in 2015-16. Among the major States, Maharashtra has the highest share of deposit (20.12 per cent) out of the total deposit in the country. The share of deposits in scheduled commercial banks in Kerala to the total deposits in scheduled commercial banks in the country as on March 2017 is 3.84 per cent (Appendix 1.42) and as on June 2017 is 3.90 per cent. The national average growth rate of deposits has increased by 11.30 per cent in 2016-17 as compared to growth of 8.65 per cent in 2015-16.

NRI Deposits

The large-scale migration of Malayalis to the Gulf region and the remittances sent by them has played a significant role in the economic development of the State. According to the data furnished by SLBC, the total NRI deposit in public sector banks in Kerala (as on March 2017) was 83,855 crore and in private sector banks was 68,493 crore. The erstwhile State Bank of Travancore had the second largest deposit with 34,461 crore and the total State bank group has NRI deposits worth 51,073 crore. The inflow of NRI deposits increased by 12 per cent from 135,609 crore in March 2016 to 152,349 crore in March 2017. NRI deposits increased to 154,252 crore as on June 2017. Domestic deposits grew by 14 per cent to 258,143 crore in March 2017 as against 225,984 crore in March 2016. The Federal Bank attracts more NRI deposits than the other public and private sector banks. The percentage share of the NRI deposit is 55.04 per cent in public sector banks and 44.96 per cent in private sector banks. The State bank group attracts 33.52 per cent and nationalised banks get 21.06 per cent of the total remittance(Appendix 1.43).


According to SLBC banking statistics, as on March 2017, Banks in Kerala including the commercial banks and co-operative banks disbursed 298,092 crore as advances as compared to 269,201 crore in March 2016. In the disbursement to total advances, private sector banks stood at the top most place disbursing 90,032 crore in March 2017 which was 80,247 crore in 2016 in March. Nationalised banks disbursed 83,886 crore followed by State Bank Group with 68,415 crore and Co-operative banks with 42,018 crore respectively during March 2017. As of June 2017 (i.e. after the merging of SBI with its 5 associates)public sector banks disbursed an amount of 162,405 crore followed by Private Sector banks (98,728 crore) and co-operative banks (42,673 crore).

Advances for Agricultural Purpose

The bank group-wise disbursement of agricultural advances show that total agricultural advance including co-operative banks as on March 2017 reached 68,787 crore which was 60,921 crore in March 2016. The percentage of agricultural advance to total advance has reached 23 per cent. The bank group wise analysis shows that as on March 2017, Regional Rural Bank provides the highest agricultural advances(61 per cent) out of its total advances followed by nationalised banks (29 per cent) and private sector banks (18 per cent). The major State-wise advances financed by Scheduled Commercial Banks is given in the Appendix 1.44.

Advances to SC/ST and Weaker Section

An amount of 4,549 crore and 1,172 crore was disbursed to SC and ST persons respectively in March 2017 in the State by various banks including private sector banks. In the previous year as on March 2016, an amount of 4,437 crore and 1048 core was disbursed to SC and ST persons respectively. Compared to the previous year there is a 2.52 per cent increase in the advances given to Scheduled Caste and 11.83 per cent increase in the advances given to Scheduled Tribe persons. The bank group-wise advances given to SC and ST are given in Table 1.14.

Table 1.14
Banking Group-wise Details under SC/ST Advance as on March 2017, in crore.
Bank SC Advances ST Advances
Number Amount Number Amount
State Bank Group 197,967 3,604 59,785 879
Nationalised Bank 72,074 693 17,726 201
RRB 26,196 143 14,106 77
Private sector bank 8,819 109 964 15
Total Commercial Banks 305,056 4,549 92,581 1,172
Source: State Level Bankers Committee, Kerala 2017

As per SLBC data, in March 2017, 63,877 crore has been disbursed to weaker sections in the State. Corresponding figure in March 2016 was 54,243 crore indicating nearly 18 per cent growth in the amount sanctioned to weaker sections.

Housing loans

As per SLBC data (March 2017), banks in Kerala including commercial banks and co-operative banks sanctioned 37,644 crore to 731,427 beneficiaries as housing loan against 33,728 crore to 772,781 beneficiaries during March 2016. There was a 11.61 per cent growth in total housing loan sanctioned. As on March 2017, State Bank Group disbursed 15,269 crore to 207,885 beneficiaries. While nationalised banks released 9,663 crore to 168,097 beneficiaries, regional rural banks disbursed 1,922 crore to 44,301 beneficiaries. Private sector banks disbursed 3,676 crore to 58,546 beneficiaries and co-operative Banks disbursed 7,114 crore to 252,598 beneficiaries. The share of beneficiaries to total is highest in co-operative Banks (34.53 per cent) followed by State Bank Group (28.42 per cent) and other nationalised banks (22.98 per cent). SLBC data reveals that State Bank Group has disbursed the major share of housing loans (40.56 per cent) followed by other nationalised banks (25.67 per cent) and co-operative banks (18.90 per cent). After the amalgamation of associate banks with SBI, as on June 2017, public sector banks disbursed the major share of housing loans (70.39 per cent) followed by co-operative banks (20.06 per cent) and Private sector banks (9.54 per cent).

Educational Loan

It is observed that at the end of March 2017, 8,995 crore was sanctioned to 369,041 students as educational loan against 9,441 crore to 363,355 students during March 2016. This shows that there is a substantial decrease in the sanctioning of education loan during 2017. SLBC banking statistics reveals that State Bank Group disbursed 2,320 crore to 108,567 students. The nationalised banks disbursed 4,654 crore to 177,576 students which accounted for 52 per cent of the total educational loan disbursed by all banking groups in the State. Regional Rural Banks disbursed an amount of 856 core to 32,738 students, private sector banks disbursed 1,074 crore to 45,702 students and the Co-operative banks disbursed an amount of 91 crore to 4,458 students as education loan during March 2017. The percentage share of educational loan NPA in total outstanding education loan during 2017 increased to 13 per cent. As on June 2017, 9,267 crore was sanctioned to 350,153 students.

Box 1.1
Education Loan Repayment Support Scheme

A Scheme for providing government support to those who find it extremely difficult to repay the educational loan debts after the completion of their course was announced in the Budget 2016-17 and 2017-18. The scheme envisages government support to those who availed education loan for a relief period of four years after the repayment holiday. Under this scheme, education loans sanctioned to students are classified into two categories namely.

  • Education loan non-NPA/standard account and
  • Education loan turned to NPA account on or before March 31, 2016.

Annual repayment amount (Principal plus interest) will be shared between the government and the borrower in the specified ratio during the 4 year relief period for the first category. In the case of second category, Government will assist the borrower to settle and close the loan account by paying specified amount as per eligibility.

The scheme would be adopted by all Scheduled Commercial Banks/Co-operative banks and would be applicable only for the recognised Technical/Professional courses in India. Financial support under this scheme shall be available to loans with sanctioned limit up to 9 lakh. SLBC will be the nodal agency for the smooth implementation of ‘Education Loan Repayment Support Scheme’.

Source: G.O(P) No.65/2017/Fin dated 16/05/2017

Micro Finance

Commercial banks, Regional Rural Banks (RRBs), cooperative societies and other large lenders have played an important role in providing refinance facility to micro finance institutions (MFIs). Micro finance institution serves as a supplement to banks. These institution not only offer micro credit but they also provide other financial services like savings,insurance,remittance and non-fianancial services like individual counseling, training and support to start own business in a convenient way. It is a boon for those who do not have access to regular banking services. As per SLBC statistics, in Kerala, more than 2.70 lakh self help groups (SHGs) maintain their savings bank account with 1,504 crore in various banks as on March 2017.

The bank group-wise data shows that Nationalised Banks attracts more accounts (50.5 per cent) followed by RRBs (21 per cent), Private sector banks (18.8 per cent) and State Bank Group (9.7 per cent). In terms of deposits of SHGs, nationalised banks attract 72.74 per cent of total SHG deposits. The deposit shares of SHG in the State Bank Group, RRBs and private sector banks was 3.66 per cent, 4.72 and 18.88 per cent respectively.

Credit-Deposit Ratio

The credit-deposit (CD) ratio of banking sector in India of Scheduled Commercial Banks at the end of March 2017 was only 73.73 per cent. It was 77.86 in March 2016. Among the major States, Tamil Nadu has the highest CD ratio (106.55 per cent) followed by Maharashtra (106.28 per cent) and Andhra Pradesh (100.21 per cent). As on March 2017, the CD Ratio in Kerala of scheduled commercial banks is only 59.71 per cent which is lower than the 61.84 per cent in the previous year (Appendix 1.45). According to the RBI quarterly statistics, by the end of June 2017, the total deposits of scheduled commercial banks in Kerala is 419,839 crore and total credits is 249,529 crore, that is CD Ratio of 59.43 per cent.

The CD Ratio of banking sector in India of public sector banks in India by the end of March 2017 is 69.64 per cent. It was 74.68 per cent in March 2016. Among the States, Maharashtra has highest CD Ratio (109.20 per cent) followed by Telangana (106.35 per cent) and Tamil Nadu (105 per cent). The CD Ratio of public sector banks in Kerala is 63.04 per cent. In March 2016, it was 67.09 per cent. (Appendix 1.46).

District-wise Analysis of Banking Statistics

The district-wise analysis of banking statistics reveals that Ernakulum has the highest number of branches (999) followed by Thrissur (733) and Thiruvananthapuram (725). The lowest number of branches is in Wayanad (121). In Kerala CD ratio of Wayanad (115.91 per cent) and Idukki (107.37 per cent) remain high. Among the districts Pathanamthitta is at the bottom with CD ratio of 25.24 per cent (Appendix 1.47). In Kerala, the share of deposits is more in Ernakulum district. District-wise distribution of deposits and credits of scheduled commercial banks in Kerala as on March 2017 is shown in Figure 1.15.

Figure 1.15
District-wise Distribution of Deposits and Credit of Scheduled Commercial Banks in Kerala as on March 2017, in crore


Source: Reserve Bank of India, Quarterly statistics on deposits and credit of Scheduled Commercial Banks, March 2017.

Box 1.2
SBI merger with five Associate banks

The Union Cabinet on June 15, 2016 approved the merger of the five subsidiaries of State Bank of India (SBI) with the parent, as the Indian banking system moves into a phase of consolidation. The merger of Associate Banks as well as Bharatiya Mahila Bank with SBI, results in the first ever large-scale consolidation within the Indian banking industry. Merger of SBI with its 5 associates namely State Bank of Bikaner and Jaipur (SBBJ), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Hyderabad (SBH), State Bank of Patiala (SBP) and Bharatiya Mahila Bank took place on April 1, 2017.

In Kerala, after the merger of 5 Associate banks and Bharatiya Mahila Bank, State Bank of India has 22 per cent branch network in Kerala with 1313 branches as on October 31, 2017. The market share of deposits in Kerala has increased from 11.60 per cent to 32.74 per cent and that of advances has increased from 10.60 per cent to 25.82 per cent after the merger.

The total number of SBI/Associate banks/BMB branches and ATM counters relocated/rationalised in connection with SBI and Associates merging is given in Appendix 1.48. The District-wise number of branches and ATMs as on October 31, 2017 is given in Appendix 1.49.

Source: State Bank of India Annual Report 2016-17

Co-operative banking sector in Kerala

Kerala State Co-operative bank is the apex bank of the short term credit in Kerala. Also it acts as a central balancing centre to absorb surplus funds of District Cooperative Banks, Primary Agricultural Cooperative Societies (PACS) and other Cooperative institution. According to SLBC data for March 2017, out of a total of 7,312 branches, 980 branches are in the co-operative banking sector. Of the total 980 branches 135 are in rural, 26 are in semi-urban area and 819 are in urban area.

The total deposits of commercial and co-operative Banks as on March 2017 was 474,626 crore. The deposits of co-operative banks as on March 2017 were 64,134 crore, which is 13.51 per cent of the combined deposits of commercial banks and co-operatives. The total advances from both commercial banks and co-operatives in the State was 298,093 crore in March 2017. Out of total advances of 298,093 crore the share of cooperatives is 42,018 which accounts for 14.10 per cent of the total advances of the State. The total agricultural advances in the State as on March 2017 was 68,787 crore and the share of co-operatives is 7,330 crore (10.66 per cent). The total banking business in the State was 690,528 crore in March 2016 which increased to 772,718 crore in March 2017. (Table 1.15).

Table 1.15
Performance of Co-operative Sector
Parameter March 2017 Share of co-operative to Total (%)
Co-operative Sector Commercial Banks Commercial Bank and Co-operative Bank
Branches 980 6,332 7,312 13.40
Total Deposits 64,134 410,492 474,626 13.51
Total Advances 42,018 256,075 298,093 14.10
Total Business 106,152 666,566 772,718 13.74
Priority sector advances 26,366 142,102 168,468 15.65
Agriculture Advances 7,330 61,457 68,787 10.66
SME Advances 963 39,408 4,0371 2.39
Source: - State Level Bankers Committee, Kerala 2017.
Box 1.3
Kerala Co-operative Bank

The re-structuring of short term Cooperative Credit structure in Kerala was announced by the Hon’ble Governor of Kerala on June 24, 2016 in the Kerala Assembly. The Government of Kerala appointed an Expert committee headed by Professor M.S. Sriram, Indian Institute of Management Bangalore, to explore the possibilities of merging the 14 District Co-operative Banks and Kerala State Cooperative Bank into a single entity. The Expert Committee submitted its report suggesting the merger of 15 banks together to form a technologically, high profile modern bank which will be able to cater to the needs of the youth. All modern banking facilities including Forex business shall be made available through the 820 branches of Kerala Co-operative Bank.

Government has appointed a task force for the formation of Kerala Co-operative Bank consisting

of a Chairman and 3 member’s one each for Banking, IT and HR and Co-operation. The task force has started functioning and the process of integration is on the wheel. It is expected that the "Kerala Co-operative Bank” will be able to start functioning w.e.f "Chingam Onnu” (1st of Chingam), 2018.

The vision for the new bank is "Safe and Reliable Banking for everybody” and the Mission is "to be the most accessible, friendly and safe banking service for the common citizen of Kerala providing a comprehensive end to end and enriching financial services for carrying out life and livelihoods with dignity.”

The proposed Kerala Co-operative Bank (KCB) is envisaged as a modern bank for the common people of Kerala including farmers, women, younger generation, small and micro entrepreneurs, non-resident Indians etc. The Kerala Cooperative Bank formed will be a full service universal bank in the cooperative sector. The core of its service would be to the Primary Agricultural Co-operative Societies (PACS) and its members. The new bank will strive to serve all segments of the society and would be an institution that instills the pride of Kerala and all that Kerala represents. It will be "a peoples own bank.” The bank shall be offering all traditional and modern banking products and services to the people of the State at affordable cost.

It may be said without doubt that the co-operative banking system in Kerala plays an important role in serving the people and support the rural economy of the State. The prime motive behind the concept of Kerala Bank will be to serve the growing needs of funds for the growth and development of the State.

The new bank will have a professional Board of Directors, consisting of 22 members with an experienced banker as the Chief Executive Officer, 14 representatives of PACS (one member from each district with minimum qualifications prescribed), two members representing Apex Cooperative Societies, three representatives from domain/subject experts by adopting fit and proper criteria, two ex-official representatives one each from NABARD and Department of Cooperation, Govt. of Kerala. No Regional Boards are suggested.

The headquarters of the new bank shall be at Thiruvananthapuram and it shall have 7 regional offices, one covering two districts, headed by regional managers, with adequate sanctioning powers. The regional offices shall have a dedicated team to hand hold the PACS under their jurisdiction by assuming the role of a mentor. The present network of branches of the entities to be merged shall continue.

Co-operative Banking is presently maintaining a three-tier system. This consists of "Kerala State Cooperative Bank” on the top level, "District Co-operative Banks” on the second level followed by "Cooperative Banks and Societies” on the lower level. After the formation of Kerala Bank this will be converted to a two-tier system.

Source : Kerala Co-operative dept. and Expert Committee Report on Formation of Kerala Bank.