The bank was established on 30th June 1936 under the visionary leadership of Parakkal Vasu Menon, a prominent co-operator from Palakkad, with the primary aim of assisting small traders and the impoverished. Sri. C. Kochunnimannadiar was appointed as the first president. Subsequently, the bank’s office was relocated to Court Road, Palakkad, where a new head office building was erected in 1965.

The institution was registered as a co-operative society under Section 10 of the Negotiable Instruments Act, 1932, of Madras State, operating on the principle of limited liability. It was officially named The Palghat Co-operative Urban Bank Ltd. No. F.997. This certification was granted by the Deputy Registrar of Co-operative Societies, Calicut. At its inception, the society comprised 17 members, and its operational jurisdiction was confined to the Palghat Municipality. The initial share capital amounted to Rs. 25,000/-. The first General Body Meeting convened on 3rd August 1936, was presided over by Sri. P. Vasudeva Menon, B.A., B.L.

A significant milestone in the bank’s history was achieved in 1982 when it obtained a license from the Reserve Bank of India, marking a pivotal moment that catalyzed its subsequent growth and development.