Login With Google
Cooperatives to come under RBI purview
Why is it in the news?
- The Union Cabinet has approved amendments to the Banking Regulation Act, which will empower the Reserve Bank of India to have regulatory oversight over cooperative banks.
More in the news
- Data on Cooperative banks:
(1) According to an RBI report, there were 1,500 plus urban cooperative banks as on 31 March 2018, and 96,612 rural cooperative banks as on 31 March 2017.
(2) It has more than 8.6 crore depositors, Rs 5 lakh crore deposits and 1,540 multi-state, urban and other cooperative banks.
- The Amendments came In the wake of the recent Punjab & Maharashtra Cooperative (PMC) Bank crisis.
- It Will bring 1,540 cooperative banks under the Reserve Bank of India (RBI) regulation.
- Aim: To strengthen the financial stability of cooperative banks and boost public confidence in the banking system.
- As per the Proposed Amendments
(1) Administrative matters would continue to be under the Registrar, Cooperative.
(2) Cooperative banks would be regulated under the RBI’s banking guidelines.
(3) Their auditing would also be done as per its norms.
(4) Qualifications would be laid down for appointments, including that of Chief Executive Officers.
(5) Prior permission from the RBI would be required for the appointment of key positions.
(6) The regulator would deal with issues such as loan waivers.
(7) The RBI would also have powers to supersede the board of any cooperative bank in financial distress.
- Currently:
(1) Cooperative banks are governed by dual regulations- state cooperative bodies and the RBI.
(2) While financial supervision comes under the ambit of the banking regulator, appointments are mostly looked after by the state bodies.
Source
The Hindu, LiveMint.