Chandigarh, Jan 8: The Punjab government has proposed the amalgamation of 16 district central cooperative banks (DCCBs) with the Punjab State Cooperative Bank (PSCB) in a move aimed at improving financial strength and reducing repeated capital infusion by the state.
A high-level delegation led by Finance Minister Harpal Cheema recently met senior officials of the Reserve Bank of India (RBI) in Mumbai and submitted two proposals — one for merging all 20 DCCBs with the PSCB, and another limiting the exercise to 16 banks whose general bodies have already approved voluntary amalgamation.
Officials aware of the discussions said the RBI is more inclined to consider the second proposal due to ongoing court cases filed by four DCCBs — Jalandhar, Kapurthala, Hoshiarpur and Nawanshahr — which have challenged the merger plan.
“This will help create a stronger cooperative banking institution with better capital strength and improved profitability,” a senior official said, adding that the state is often required to infuse funds when these banks fail to maintain the minimum capital-to-risk weighted assets ratio (CRAR) of 9 per cent.
According to the government, operating 20 separate district-level cooperative banks has led to administrative duplication and financial stress, making it difficult for them to compete with large commercial banks. “The present structure has become financially weak and administratively heavy,” the official said.
The idea of merging DCCBs with the PSCB dates back to 2017, when it was first announced in the Budget by the previous Congress government. The Council of Ministers cleared the proposal in December 2018 after consultations with stakeholders, citing long-term sustainability of the cooperative credit system.
In December 2020, the RBI gave in-principle approval, subject to all DCCBs passing resolutions for voluntary amalgamation. While 16 banks complied, four did not, leading the Registrar, Cooperative Societies, to order compulsory amalgamation under the Punjab Cooperative Societies Act, 1961 — a move later stayed due to legal challenges.
After assuming power in 2022, the AAP government renewed efforts to revive the proposal. Chief Minister Bhagwant Mann also took up the matter with the Union Finance Minister and the RBI Governor in 2023, seeking early clearance.
