RBI to re­view co-op bank regime

The Times of India (New Delhi edition) - - Times Global - TIMES NEWS NET­WORK Ev­ery such in­ci­dent is an ex­pe­ri­ence. Based on this ex­pe­ri­ence, we take a fresh look at the reg­u­la­tory frame­work that is in ex­is­tence, and if any changes are re­quired, we’ll take it up with the govt

Mum­bai: Re­serve Bank of In­dia (RBI) gov­er­nor Shak­tikanta Das has said that the cen­tral bank will re­view the reg­u­la­tory frame­work for co-op­er­a­tive banks and will dis­cuss with the gov­ern­ment if any changes are re­quired. The gov­er­nor’s state­ment was in light of the Rs 4,355-crore Pun­jab and Ma­ha­rash­tra Co-op­er­a­tive (PMC) Bank fraud, which has re­sulted in the RBI freez­ing de­posits of lakhs of cus­tomers.

In his post-pol­icy in­ter­ac­tion, Das said that one in­ci­dent should not be used to gen­er­alise the health of the co-op­er­a­tive bank­ing sec­tor. “I want to re­it­er­ate that the In­dian bank­ing sec­tor re­mains sound and sta­ble. And there is no rea­son for any panic. In fact, some­times ru­mours can cre­ate a panic sit­u­a­tion. I would like to ap­peal to all mem­bers of the pub­lic not to be­lieve in such re­marks,” said Das.

Stat­ing that the RBI would not al­low a co-op­er­a­tive bank to col­lapse, Das said that co­op­er­a­tives de­velop their own prob­lems be­cause of so many fac­tors. “Ev­ery such in­ci­dent is an ex­pe­ri­ence. Based on this ex­pe­ri­ence, we take a fresh look at the reg­u­la­tory frame­work that is in ex­is­tence, and if any changes are re­quired, we will take it up with the gov­ern­ment,” said Das.

Ac­cord­ing to the gov­er­nor, the RBI did not take the forced merger route for PMC Bank as ev­ery case was unique. Co-op­er­a­tive banks have been a reg­u­la­tory chal­lenge for the cen­tral bank given the dual-reg­u­la­tion struc­ture un­der both the RBI and state gov­ern­ments. The RBI had ear­lier given an op­tion to co-op­er­a­tive banks to con­vert into small fi­nance banks, which would bring them out of the dual-reg­u­la­tion struc­ture and be mon­i­tored by just the RBI.

“No co-op­er­a­tive bank has come for­ward. Given the na­ture of co-op­er­a­tive banks — they have mem­bers, not share­hold­ers — there are le­gal is­sues. Based on our in­ter­nal re­view, we will take up with the gov­ern­ment what­ever changes are re­quired to be un­der­taken,” said Das.

Das said that while he could not dis­cuss RBI ac­tion on an in­di­vid­ual bank, he said that all as­pects of PMC Bank is­sue were be­ing looked into. De­fend­ing the RBI move to place re­stric­tions on op­er­a­tions, Das said that the cen­tral bank had acted swiftly and its ac­tions were in keep­ing with the cir­cum­stances of the case. He added that be­cause a merger worked in one par­tic­u­lar case, it need not be used to re­solve ev­ery one.

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