Urban Cooperative, Multi-State Co-Op Banks to be Brought Under RBI Supervision Through Ordinance: Govt
All urban cooperative and multi-state co-op banks would be brough under the supervision of Reserve Bank of India (RBI) and the central government would issue an ordinance for this, says Prakash Javdekar, union minister for environment, forest & climate change; information & broadcasting and heavy industries & public enterprises.
 
Briefing the media after the cabinet meeting, Mr Javadekar says, "The cabinet decision to issue an ordinance for bringing 1,540 cooperative banks under RBI's supervision will give an assurance to more than 8.6 crore depositors in these banks that their money amounting to Rs4.84 lakh crore will stay safe."
 
 
As per the minister, banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, would be brought under the supervisory powers of RBI. With the new ordinance, RBI's powers as it applies to scheduled banks would apply for cooperative banks as well.
 
In terms of regulatory power, the RBI had limited control over cooperative banks, thereby, increasing the risk on the depositors.

At present, there are various types of cooperative banks, which come under different central and state regulations.

The development assumes significance after last year's multi-crore fraud in Punjab and Maharashtra Cooperative ((PMC) Bank.

In February, the government amended the Banking Regulation Act to give RBI more regulatory powers over cooperative banks.
However, these amendments failed to be passed through the Budget session due to Covid-19 outbreak.

Currently, the RBI can not audit these banks or give its consent for the appointment of the cooperative bank's chief executive (CEO), without these new powers.
 
The cabinet also approved a scheme for interest subvention of 2% to SHISHU loan category borrowers under Pradhan Mantri Mudra Yojana (PMMY). "It will be of great benefit to 9.37 crore people and the scheme will be effective from 1 June 2020 till 31 May 2021," Mr Javdekar informed.
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    COMMENTS

    tillan2k

    7 months ago

    why permit freeway to cooperative like multi States multi-districts.. if should be close affair it is open invitation to frauds by political leaders

    kalemohan

    7 months ago

    GOOD .But what about the investor's money which is blocked by RBI in co op.banks since 2010/2013.This money is with poor interest this also is blocked in banks.

    spicesich

    7 months ago

    WELCOME MOVE. IMPLEMENT IT AS EFFICIENTLY AS POSSIBLE, WITH QUALITY.

    renukaviru

    7 months ago

    Long-awaited steps surely will have a positive-effect on depositors' morality and confidence in the system.

    kvrao42004

    7 months ago

    The ordinance has come as a last straw on camel's back. A simple but a serious issue. RBI cannot simply control cooperative banks. When RBI has failed in controlling public sector banks, how it can manage this burden? You may have to create another RBI , and call it RBI (CBs)
    Again this is just a suggestion that cannot solve the real issue. Am I sounding pessimistic? Whether government banks or private ones, till such time we have men of integrity at the micro level (read branches) problem remains unsolved. At private banks managers accountability is well established. But in cooperative banks and public sector white elephants, accountability is merely on paper. In very few cases culprits have been booked compared to the huge number of NPA accounts. Certain portion of NPAs are no doubt genuine business losses. But others are frauds and wilful defaults. Finally, don't you think it is difficult to oust politicians in cooperative banks boards most of them are relatives and friends of MLAs and MPs? Madam FM, again you are peddling a wrong path. God save all our banks?

    Aar Aar

    7 months ago

    I suppose this is what ML was campaigning for. Co-op banks were never the holy banks but atleast they gave easy access to credit for farmers and rural poor. Now these banks will also behave with brahmin attitude towards villagers.
    BJP is destroying the federal nature of Indian union. Anyone who says RBI is independent is native.

    REPLY

    janak15081947

    In Reply to Aar Aar 7 months ago

    Is the state government or any body of Co-op banks ready to indemnify depositors of one of them does fraud? If not, then better to have some regulator rather than no regulator. Please don't be casteist in financial matters.

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