The Union Cabinet on Wednesday decided to bring over 1,500 urban and multi-state cooperative banks under the Reserve Bank of India’s supervision through an ordinance, ANI reported. This was announced by Union minister Prakash Javadekar at a virtual press conference.
“Government banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, are now being brought under the supervisory powers of RBI,” Javadekar said. “RBI’s powers as they apply to scheduled banks will apply for cooperative banks as well.”
The decision to bring 1,540 cooperative banks under the central bank will give an assurance to more than 8.6 crore depositors that their savings amounting to Rs 4.84 lakh crore will stay safe, he added.
Finance Minister Nirmala Sitharaman had announced that cooperative banks would be brought under the ambit of the RBI in her Budget speech in February. The Cabinet had then approved the amendments to Banking Regulation Act. However, the Banking Regulation (Amendment) Bill, 2020, could not be passed in the Budget session of the Parliament.
The amendments were made after the central bank last year took charge of Punjab and Maharashtra Cooperative Bank – one of the country’s top five lenders with more than nine lakh depositors – and suspended the bank’s board after uncovering lending irregularities. As thousands of the bank’s customers were left in distress, questions were raised about the lack of regulatory supervision.