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2 RRBs in Karnataka to be amalgamated

Karnataka Vikas Grameena Bank to retain independent status

The Union Finance Ministry’s Department of Financial Services (DFS) has given in-principle approval for the amalgamation of the Mysuru-headquartered Kaveri Grameena Bank (sponsored by State Bank of India) and the Bellary-headquartered Pragathi Krishna Grameena Bank (sponsored by Canara Bank) in Karnataka.

Canara Bank will be the sponsor bank for the amalgamated entity.

The Dharwad-headquartered Karnataka Vikas Grameen Bank (sponsored by Syndicate Bank), which is the other regional rural bank (RRB) in Karnataka, has retained its independent status.

In a letter to the MD and CEO of Canara Bank, dated February 6, Manish Gupta, Director, DFS, said: “In-principle approval has been accorded after consulting Nabard on the proposal for amalgamation of Kaveri Grameena Bank and Pragathi Krishna Grameena Bank, sponsored by State Bank of India and Canara Bank, respectively.”

However, in a letter dated June 7 2018, to the Chairman, Chairman and Managing Director, and Managing Directors of sponsor banks of RRBs, DFS had requested the sponsor banks for their ‘No Objection Certificate’ for the amalgamation of RRBs at the State-level.

The letter said: “It is envisaged that RRBs within a State could be amalgamated. Accordingly, GoI, in consultation with Nabard, has approved the road map for the amalgamation of RRBs.” The road map was aimed at bringing down the number of RRBs in the country from the existing 56 to 38.

Following this, the Finance Department of the Karnataka government, in a letter dated July 2 2018, had recommended to permit Karnataka Vikas Grameen Bank (KVGB) and Pragathi Krishna Grameena Bank (PKGB) to retain their identities. It said that Kaveri Grameena Bank may be merged with either of the two RRBs.

In that letter, the Additional Chief Secretary, Karnataka’s Finance Department said: “The presence of two RRBs in the State will help to create a healthy competition among these RRBs and will deliver better customer service to the rural population.”

The letter stated that KVGB and PKGB have been performing well in rural lending and implementation of social schemes of the government. KVGB has created a unique niche in the rural and agricultural banking in the State.

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