Title : URBAN COOPERATIVE BANKS

Date : Dec 14, 2021

Description :

GS III

 

Topic à Indian Economy

 

• In 2020, the Union Cabinet approved bringing cooperative bank regulation under the Reserve Bank of India.
• To do this, the Cabinet authorised changes to the Banking Regulation Act.
• Now, the Reserve Bank of India (RBI) and India's Prime Minister have hinted that more reforms to the Urban Cooperative Banks will be implemented in order to improve their performance.
• All urban co-operative banks and multi-state cooperative banks will be affected by the changes.

 

• The following were the modifications that were made:

 

• The RBI's auditing standards will be applied to cooperative banks.
• If a cooperative bank is in distress, the RBI, in collaboration with the state government, has the authority to supersede the board.
• The banking regulator will have to approve chief executive appointments, just as it does for commercial banks.

 

• What was the need for this:

 

• Following the recent Punjab & Maharashtra Cooperative (PMC) Bank crisis, this was deemed required.
• There are 8.6 lakh account holders in cooperative banks, with a total deposit of roughly 5 lakh crore.
• In addition, over the last five fiscal years, urban cooperative banks have recorded almost 1,000 cases of fraud totaling over Rs 220 crore.

 

• How are cooperative banks governed:

 

• The Registrar of Cooperative Societies and the Reserve Bank of India are currently in charge of cooperative banks.
• While the registrar of cooperative societies is in charge of incorporation, registration, management, audit, board supersession, and liquidation, the RBI is in charge of regulatory functions like cash reserve and capital adequacy.

 

• What are co-operative banks, and how do they work:

 

• Co-operative banks are financial institutions that are owned by their members and operated cooperatively.
• This means that a co-operative bank's customers are also its owners.

 

• Source à The Hindu à 13/12/21 à Page Number 1

Tags : RBI, PMC Bank