The Kerala government has decided to set up a bank to cater exclusively to Non-Resident Indians.
Christened the 'NRI Cooperative Bank,' the new bank will begin operations across Kerala by March 2004.
"This is for the first time in India that an exclusive bank is being set up for NRIs. We have received encouraging response from NRIs and their organisations on the novel project," Kerala's Cooperative Minister M V Raghavan told rediff.com.
He said the state government hit upon the idea of a bank exclusively for NRIs after various agencies, including the Reserve Bank of India, praised the transparent and profitable management of Kerala's cooperative banks.
The minister said that the state government will own the majority stake in the NRI Cooperative Bank, but shares of the proposed bank would also be sold to NRIs. He said the initial equity base of the bank would be Rs 10 crore (Rs 100 million).
"The headquarters of the new bank will be at Thiruvananthapuram. The bank will have branches in all the district headquarters in Kerala to begin with," Raghavan said.
He said the bank would branch out of Kerala after the initial years of operations in the state.
He said the state government would soon apply to the Reserve Bank of India for permission to start the bank.
The state government is trying to chalk out a strategy similar to the one it adopted while floating the Cochin International Airport a few years back.
Cochin International Airport is India's first airport built by a public company formed jointly by the Kerala government, several financial institutions and scores of NRIs.
There are approximately 10,000 NRI shareholders in the airport company that has begun running at a profit in the fifth year of its operations this year.
The Kerala government hopes the NRI Cooperative Bank will be the turning point in the state's banking history if it succeeds in channelising deposits from the millions of expatriate Malayalees across the Persian Gulf region and other countries.
Nearly half of more than three million Indians working in various Gulf countries are from Kerala. They are credited with having boosted Kerala's economy in the past three decades by sending remittances worth billions of rupees every month.
A team of senior state government officials, led by Raghavan, has toured extensively across the Gulf region to mobilise funds to start the NRI bank.
Officials associated with the setting up of the bank said that the NRI Cooperative Bank will provide housing and education loans to NRIs at much lower levels than the prevailing rates of interest.
The bank is expected to generate hundreds of job opportunities for many in the state. The government is also toying with the idea of appointing experts from various fields onto the bank's board.
