Almost 600 urban cooperative banks and 25 multi-state cooperative banks in Maharashtra will now come under the jurisdiction of the Reserve Bank of India. These banks will have to compete with commercial and private banks. However, experts argue that some of them may merge with private banks in due course.
This was necessary after the Union Cabinet decided on Wednesday to place government banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, under the supervisory powers of the Reserve Bank of India (RBI). These banks will be placed under the supervision of the RBI with immediate effect from the date of the approval of the order by the President. Maharashtra, with 600 urban cooperative banks and 25 multi-state cooperative banks, plays a key role.
After the Punjab and Maharashtra Cooperative Bank (PMC) scam last year, the Union cabinet amended the Banking Regulation Act in February to strengthen the country’s cooperative banks.
Maharashtra’s Cooperation Minister Balasaheb Patil said: “The Centre’s decision aims to keep an eye on the cooperative sector. Maharashtra has a 60 percent share of the cooperative sector at the national level. Even though the Center says the decision was taken to protect the interests of depositors, it was to control the cooperative sector in Maharashtra. ”
On the other hand, Amruta Pawar, chairman of the Nashik-based Godavari Urban Cooperative Bank, said that urban cooperative banks are subject to RBI regulations, but rural cooperatives and district cooperatives fall under the National Bank. for agriculture and rural development (NABARD). From now on, these banks will also be under the control of the RBI. “However, we do not know what will happen to the double control of the Ministry of Cooperation on urban cooperative banks and what will be the fate of the shareholders of cooperative banks,” she noted.
Pawar also wanted to know who will conduct the elections to the board of directors of cooperative banks with the new arrangement.
Union Joint Action Committee (Maharashtra) co-organizer Vishwas Utagi said the RBI has been the regulator of cooperative banks from the start. However, the respective states have also overseen the cooperative banking system for many years. “With today’s decision, the role of state government comes to an end. However, there are fears that the cooperative banking system will shrink further, paving the way for privatization, ” he noted.
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Posted on: Thursday Jun 25, 2020 6:00 AM IST