An ordinance has been approved by the Union Cabinet, approving to bring co-operative banks under the control of Reserve Bank of India. With this, the Urban Cooperative Banks and Multi State Co-operative Banks will now have to function according to the RBI rules. With the President signing in, the ordinance will come into effect. It is estimated that the new ordinance cover a total of 1482 Urban Co-operative Banks and 58 Multi State Co-operative Banks.
Though a similar regulation bill was introduced by the central government earlier, it didn’t materialize upon the arrival of Covid forced the government to cut short the parliament session. According to the estimates, Co-operative Banks have an investment of Rs 4.84 lakh crore, with the participation of 8.6 crore people. Upon the introduction of the regulation, all these would come under the lens of the RBI.
With the introduction of the new regulation, cooperative banks too would act just like their scheduled counterparts. Details of subjects such as non performing assets would come under the control of the RBI rules. It is widely believed that the introduction of the regulation was aimed to tighten the control over cooperative banks, some of which in the past were involved with scams.
