NEW DELHI: THE finance ministry is working on amendments to the Reserve Bank of India (RBI) Act to give it more powers over multi-state co-operative banks in lines with the powers that it has over scheduled banks. RBI has always complained that the dual nature of control over these banks means it has less authority over such banks and often blindsides it.
Officials said a committee in the ministry is looking into the issue and the legislative changes would give the central bank more control on multi-state urban co-operative banks such as the controversial crisis ridden Punjab and Maharashtra Co-operative (PMC) Bank.“We are also looking at whether and how the RBI can be given more powers on other large co-operative banks, which are currently under the control of state co-operative act,” officials said.
The mutli-state co-operatrives act may also be reworked as part of the exercise, they said. The bills may be brought in the winter session else in the budget session of Parliament. Officials said the corner stone of the reforms being contemplated would be to overhaul and re-engineer governance and management issues in the co-operative credit structure to “halt the recurring and extremely alarming from the consumer’s point of view if not from the financial sector’s point of view of co-operative banks, which go into a limbo and commit all kinds of breaches of regulation.”
Currently, RBI oversees the functioning of about 1,926 urban co-operative banks and the department for this performs three main functions. These include regulation by way of licensing and by seeing to it that SLR and CRR norms are followed by these banks, supervision in a manner, which ensures the “thrust of supervision ensures that banks’ affairs are not conducted in a manner detrimental to the depositors’ interest.
RBI oversees functions of 1,926 urban co-op banks
It includes regulation by way of licensing and by seeing to it that SLR and CRR norms are followed by the banks, supervision in a manner, which ensures the thrust of supervision ensures that banks’ affairs are not conducted in a manner detrimental to the depositors’ interest