There was a need to enhance the accountability of these banks which hold public money and are often riddled in controversies
NEW DELHI| On Wednesday the Union Government announced approval to a decision to bring 1,540 cooperative banks that hold close to Rs 5 lakh worth of deposits from 8 crore lakh account holders, under the purview of Reserve Bank of India (RBI). These banks will be supervised by the RBI in the same fashion as the scheduled banks, offering protection to depositors and reducing the space for mismanagement.
Union Minister Prakash Javadekar said, “All urban cooperatives and multistate cooperative banks are being brought under the supervision of the Reserve bank of India. There are 1,540 such banks that hold close to Rs 5 lakh crore worth of deposits from over 8 crore lakh account holders. The move to bring them under the RBI will give depositors the assurance that their savings are safe in these banks.”
Earlier this year in February, finance minister Nirmala Sitharaman had announced the government’s intention to bring the cooperative banks under RBI’s supervision and said that it will be done through an amendment to the Banking regulation act. Javadekar said the government had issued an ordinance in this respect on Wednesday.
The government had earlier said that there was a need to enhance the accountability of these banks which hold public money and are often riddled in controversies around mismanagement and corruption.
The government moves follow several instances of fraud and cheating in banks through cooking of books, mismanagement of loans etc, resulting in a threat to deposits and stability of the country’s financial system.
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