Part of: GS-Prelims and Mains III – Economy and related issues; Banking and RBI reforms
In news:
Centre decides to bring all urban and multi-State cooperative banks under the supervision of the RBI.
This means that the central bank’s powers will apply to cooperative banks as they apply to scheduled banks.
The move is aimed to protect depositors’ money.
Do you know?
Amendments were made to the Banking Regulation Act through ordinance to bring 1,540 cooperative banks under the Reserve Bank of India (RBI) regulation to strengthen cooperative banks to avoid another PMC Bank-like crisis.
In February 1 Budget speech, Finance minister had introduced ‘The Banking Regulation (Amendment) Bill, 2020 with an aim to increasing professionalism and improving governance among the co-operative banks. However, the amendment bill is pending approval.
Important value additions:
Co-operative banks are financial entities established on a co-operative basis and belonging to their members. This means that the customers of a co-operative bank are also its owners.
Co-operative banks in India are registered under the States Cooperative Societies Act.
The Co-operative banks are also regulated by the Reserve Bank of India (RBI) and governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1955.
Currently, the Registrar of Cooperative Societies (RCS) is in control of management of elections and many administrative issues as well as auditing.
