New Delhi: The Narendra Modi government has taken a major step to reform the cooperative banks of the country. Now the banking operations of as many as 1540 cooperative banks of the country have come under the regulation of the Reserve Bank of India (RBI).
The decision was taken during the Union Cabinet meeting on Wednesday. Union Minister Prakash Javadekar informed about the major decision during a press conference at National Media Centre here on Wednesday.
Javadekar said that, at present, commercial, scheduled and nationalised banks regulate under RBI. But now under the Banking Regulation Amendment Act 2019, the norms of commercial banks will be applicable on cooperative banks as well.
However, Javadekar made it clear that the administrative system of the cooperative banks will continue as per the rules of the Co-operative Registrar as usual. RBI norms will apply only to the banking system of cooperative banks.
He informed that 8.6 crore people have deposited their money in 1540 cooperative banks of the country. These banks have a deposit of Rs 5 lakh crore. Depositors have long been raising their demand for savings security. Thus the Modi government has taken this historic decision to protect depositors' money within a week.
Javadekar said that now candidates will have to qualify and fulfil certain conditions to become a cooperative bank officer.
"Permission will be granted to appoint the CEO. RBI will issue guidelines in this regard. Audit will be done as per RBI rules," he said.
"Rules will also have to be followed for loan waiver. If the situation worsens, RBI will also have the rights to supersede and take control of the bank," he added.
Elaborating on the need of this major decision for banking sector, Javadekar said, "Most cooperative banks are functioning well in the country, but wrong practices by few banks malign the entire sector. This step has been taken to protect depositors' money. Earlier, in the budget, bank deposit insurance cover was increased to Rs 5 lakh."