Centre to bring cooperative banks under RBI through an ordinance

The Union government on June 24 has decided to bring 1,482 urban cooperative banks and 58 multi-state cooperative banks under the Reserve Bank of India (RBI). The news was announced by I&B Minister, Prakash Javadekar after the Union Cabinet’s meeting.

The Union minister informed that RBI’s power as they apply to the scheduled banks will now also apply to the cooperative banks. He added that the government has decided to introduce an ordinance that will put cooperative banks under RBI’s supervision.

Mr. Javadekar added that the decision to bring 1,540 cooperative banks under RBI will provide an assurance to more than 86 million depositors that their money amounting to Rs. 4.84 trillion will stay safe.

Amendment to the Banking regulation act:

Because of the Punjab & Maharashtra Cooperative (PMC) Bank Crisis, the union government in February 2020 had approved the amendment to the Banking Regulation Act in order to bring 1,540 cooperative banks under RBI regulation.

Finance Minister, Nirmala Sitharaman, during her budget speech, had mentioned that the cooperative banks will be brought under the regulation of RBI. However, the Banking Regulation (Amendment) Bill, 2020, was not able to pass in the parliament’s budget session, as it was curtailed due to the COVID-19 pandemic.

Decisions in Union Cabinet Meeting:

Apart from bringing cooperative banks under the supervision of RBI, the government has also approved the establishment of the Animal Husbandry Infrastructure Development Fund.

The Union government has also decided to provide a 2% interest subvention to borrowers under the ‘Shishu’ category of the flagship Pradhan Mantri MUDRA Yojana (PMMY).

In its meeting on June 24, the Union cabinet has also approved the declaration of Kushinagar Airport in Uttar Pradesh, as an International airport.