Financial Daily from THE HINDU group of publications
Sunday, May 05, 2002
Financial Daily from THE HINDU group of publications Sunday, May 05, 2002 |
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Co-operatives Money & Banking - Co-operatives Govt still undecided on separate regulator for urban co-op banks Our Bureau
NEW DELHI, May 4 THE Finance Minister, Mr Yashwant Sinha, today said that the Centre was examining the Reserve Bank of India's (RBI) proposal to set up a separate `apex supervisory body' to take over the entire regulatory and inspection functions relating to urban co-operative banks (UCBs). "We are yet to take any decision on having a separate supervisory authority for regulating cooperative banks'', Mr Sinha told newspersons on the sidelines of a felicitation function organised by the National Cooperative Union of India (NCUI) here. The Minister of State for Finance, Mr Balasaheb Vikhe Patil, was, however, even more forthright, when he observed that "there was not need'' for a separate regulator exclusively for UCBs, when the RBI was already performing this role. According to the NCUI President, Dr S.S. Sisodia, "UCBs are part and parcel of the country's banking structure and, therefore, any separate arrangement for their regulation is bound to alienate them from the mainstream''. The RBI has already submitted a draft Bill on setting up a separate supervisory authority for scheduled and non-scheduled UCBs, which, it feels, is necessary in the light of the series of scams involving these banks, starting with the Madhavpura Cooperative Bank in Ahmedabad, Krushi Cooperative Bank in Hyderabad and, more recently the Nagpur District Central Cooperative Bank. In his latest Monetary and Credit Policy statement for 2002-03, the RBI Governor, Dr Bimal Jalan, had noted that "the events of the last two years have made it abundantly clear that the present system of dual/triple regulatory and supervisory control (involving the Centre, State Governments and RBI) is not conducive to efficient functioning of cooperative banks in the interest of their depositors''. The RBI Governor pointed out that given the complex local interests involved in the running of cooperative banks, there was no consensus now in favour of doing away with the supervisory/regulatory functions of the Centre and State Governments and entrusting these exclusively to RBI. As a result, the managements and boards of several cooperative banks tended to reflect political interests, which was not amenable to normal banking discipline in their operations. "In view of this, it would be best, in the interest of public depositors, if a separate supervisory authority is set up with representatives of the Centre, States and other interest elements'', Dr Jalan said.
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