The government on Wednesday announced that all cooperative and multi-state cooperative banks will be brought under the supervision of Reserve Bank of India (RBI). The move which will be effective on 1,540 such banks, is aimed at providing comfort to their depositors, Union Minister Prakash Javadekar said in a press briefing, following a Cabinet meeting. The decision comes months after a scam hit the Punjab and Maharashtra Cooperative (PMC) Bank last year.
Depositor will be assured his money is safe," Mr Javadekar said, adding that an ordinance in this regard will be brought.
"RBI's powers as they apply to scheduled banks will apply for cooperative banks as well," he also said.
In India, there are 1,482 urban cooperative banks and 58 multi-state co-operative banks with a depositors base of about 8.60 crore.
"The decision to bring 1,540 cooperative banks under RBI''s supervision will give an assurance to more than 8.6 crore depositors in these banks that their money amounting to Rs 4.84 lakh crore will stay safe," the minister added.
Following the PMC Bank fiasco, the Union Cabinet in February had amended Banking Regulation Act to strengthen the cooperative banks in the country. The amendment sought to enforce banking regulation guidelines of the RBI in cooperative banks.
Back then, the governmnt had said that qualifications would be set for appointing CEO of cooperative banks and the RBI permission would be sought before appointment as followed in case of commercial banks.