Kerala - Thiruvananthapuram   

State signs MoU with RBI on urban banks

THIRUVANANTHAPURAM: The State government on Thursday signed a Memorandum of Understanding (MoU) with the Reserve Bank of India (RBI) to streamline the functioning of 60 urban cooperative banks and to facilitate their expansion and modernisation.

The MoU was signed on behalf of the RBI by Executive Director V.S. Vyas and on behalf of the State government by Additional Chief Secretary Neela Gangadharan in the presence of Cooperation Minister G. Sudhakaran. Some 20 States across the country have already signed similar MoUs with the RBI.

The MoU would enable the urban cooperative banks to have a more transparent and responsible accounting system and lead to the creation of a Task Force for Urban Cooperative Banks with representatives of both the RBI and the State government. The RBI would be represented in the task force by its Regional Director in Kerala and the officer-in-charge of urban cooperative banks at the RBI headquarters. The State would have the Registrar of Cooperatives and a representative of the State federation of urban banks as its nominees in the task force. One of the primary benefits of having the task force is that it would function as the point of first consideration of any dispute relating to the functioning of individual banks.

Official sources said the MoU would also facilitate starting of new branches by the urban cooperative banks and enable them to offer to customers a number of new products like ATM and credit card facilities, provide insurance and other services and result in appointment of appropriately qualified persons as their chief executive officers. It would also put to rest the ticklish question of auditing accounts, which had been hanging fire for the last several years following opposition to professional audit from internal auditors of urban cooperative banks. With the signing of the MoU, the way has been cleared for simultaneous auditing of accounts of urban cooperative banks by chartered accountants and the internal auditors. Initially, some 35 banks would have such audit of accounts.

The State government and the RBI have retained the right to withdraw from the MoU.

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