To ensure that depositors are protected, the Centre has decided to bring all urban and multi-State cooperative banks under the direct supervision of the Reserve Bank of India (RBI). The Union Cabinet approved an ordinance to this effect at its meeting on Wednesday.
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“In a landmark decision, the urban cooperatives and multi-State cooperative banks, which are 1,540 in number and have a depositor base of 8.6 crore, who have saved ₹4.84 lakh crore, a huge amount...They have been brought under RBI supervision process, which is applicable to scheduled banks. Depositors will get more security because of today’s decision,” Information and Broadcasting Minister Prakash Javadekar told journalists after the meeting.
Currently, these banks come under dual regulation of the RBI and the Registrar of Co-operative Societies. The move to bring these urban and multi-State coop banks under the supervision of the RBI comes after several instances of fraud and serious financial irregularities, including the major scam at the Punjab and Maharashtra Co-operative (PMC) Bank last year. In September, the RBI was forced to supercede the PMC Bank’s board and impose strict restrictions.
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“I am very sure when this announcement was made, people have welcomed it, and depositors will get protection and benefit out of it,” Mr. Javadekar said, regarding the ordinance approved by Cabinet.
The Cabinet also approved a scheme to provide interest subvention of 2% for a 12-month period to small borrowers with loans up to ₹50,000 under the Shishu category of the Pradhan Mantri Mudra Yojana. This relief had been announced as part of the Aatmanirbhar Bharat package last month.
