RBI regulation on cooperative sector: Kerala Government to consult legal experts

The Kerala Government will consult legal experts with regard to the regulation imposed on cooperative bodies by the Reserve Bank of India (RBI), Minister for Cooperation V. N. Vasavan has said.

The Government also plans to approach the RBI in a bid to convince it of the special role, activities and importance of the cooperative sector in the State, the Minister told reporters here on Friday. If a solution is still not forthcoming, the State will consider other options, including legal recourse, he added.

In issuing the statement, the RBI has disregarded two important rulings of the Supreme Court, Mr. Vasavan said. The court, in the case pertaining to the 97th Constitutional amendment, had noted that the cooperative sector is a State subject. The RBI statement also overlooks the Supreme Court ruling, in an income tax-related case, related to memberships in cooperative societies, he said.

(In its statement, the RBI had cautioned the public against cooperative societies that use the words ‘bank’, ‘banker’ or ‘banking’ as part of their names. The RBI also noted that some co-operative societies were accepting deposits from non-members/nominal members/associate members, which is tantamount to conducting banking business in violation of the Banking Regulation Act.)

Rural sector

Mr. Vasavan pointed out banking activities form only a part of Kerala’s service cooperative banks. They are more actively involved in the rural sector such as for issuing loans to farmers, supplying seeds, fertiliser and pesticides, and procurement and marketing of agricultural produce, the Minister added.

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Printable version | Jan 18, 2022 12:00:36 AM |

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