Coop banks to come un­der RBI watch

Hindustan Times (Jalandhar) - - HT BUSINESS - Shreya Nandi

NEW DELHI: The Union cabi­net on Wed­nes­day ap­proved an or­di­nance to bring 1,482 ur­ban and 58 multi-state co­op­er­a­tive banks un­der the su­per­vi­sion of the Re­serve Bank of In­dia, a move that will strengthen over­sight of the lenders and pre­vent a Pun­jab and Ma­ha­rash­tra Co­op­er­a­tive (PMC) Bank-like fraud.

“De­pos­i­tors will get pro­tec­tion and ben­e­fit out of it. It will give an as­sur­ance to 8.6 crore de­pos­i­tors in th­ese banks that their money will stay safe,” in­for­ma­tion and broad­cast­ing min­is­ter Prakash Javadekar told re­porters on Wed­nes­day.

Co­op­er­a­tive banks are cur­rently un­der the dual con­trol of co­op­er­a­tive so­ci­eties as well as RBI. While the role of the co­op­er­a­tive so­ci­ety in­cludes in­cor­po­ra­tion, reg­is­tra­tion, man­age­ment, au­dit, su­per­s­es­sion of board of di­rec­tors and liq­ui­da­tion, RBI is re­spon­si­ble for reg­u­la­tory func­tions. The gov­ern­ment’s move fol­lows the col­lapse of PMC Bank, which had al­legedly cre­ated fic­ti­tious ac­counts to hide over ₹4,355 crore of loans ex­tended to the now bank­rupt Hous­ing De­vel­op­ment and In­fra­struc­ture Ltd (HDIL). The fraud was dis­cov­ered by the Re­serve Bank of In­dia in Septem­ber last year.

The new reg­u­la­tory struc­ture is ex­pected to pre­vent such mal­prac­tices and strengthen co­op­er­a­tive banks, which play a cru­cial role in fi­nan­cial in­clu­sion and cater to both ru­ral and ur­ban ar­eas. The gov­ern­ment did not re­lease de­tails of the amend­ments. The co­op­er­a­tive banks will come un­der the su­per­vi­sion of RBI as soon as Pres­i­dent Ram Nath Kovind ap­proves the or­di­nance.

The move will ben­e­fit and pro­tect de­pos­i­tors, says Union min­is­ter Prakash Javadekar.

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