Cooperative Banks brought under RBI

On June 24, 2020, the Union Cabinet chaired by PM Modi approved to bring cooperative banks under the Reserve Bank of India. This is to be done through an ordinance.

Highlights

There are about 1,482 crores of urban cooperative banks. Apart from these, India also holds 58 multi-state cooperative banks. These banks together support 8.6 crores of depositors.

Background

In 2019, the Punjab and Maharashtra Cooperative Bank fiasco left 1000s of account holders distressed. Thus, in February 2020, the GoI amended the Banking Regulation Act to strengthen the cooperative banks in the country. In order to achieve this, the finance Minister Nirmala sitaraman during her budget presentation announced that the cooperative banks are to be brought under the ambit of RBI.

What is the issue?

The Banking Regulation (amendment) bill, 2020 that included the above clause of including cooperative banks under RBI could not be passed during the budget session of the parliament. Thus, it is now being proceeded through an ordinance.

Month: Current Affairs - June, 2020