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KR Srivats
Call this a fallout of the Punjab & Maharashtra Co-operative Bank (PMC Bank) crisis and other failures in the cooperative banks segment in recent years.
The Centre plans to put in place a robust regulatory system governing multi-state co-operative and urban co-operative banks, said Finance Secretary Rajiv Kumar.
On the anvil are specific capital adequacy norms for such banks besides management norms, including qualifications for directors, managing directors and no conflict of interest in their appointments.
The proposed norms will also cover loan size, single party and group exposure for lending by these banks.
“Co-operative banks play a very important role in the economy. At the same time if you are taking deposits, you have to be responsible. The norms will be introduced through the amendments to the Banking Regulation Act,” said Kumar said at a post-Budget interaction.
Powers of registrars
Kumar also made it clear that the proposed changes will not affect the powers of the registrars who oversee the co-operative sector. “Only the portion related to banking will be changed.
“The rest all remains as far as co-operative sector is concerned,” he added. He also indicated that the government may now specify separate capital adequacy norms for co-operative banks.
“There is a case for having a dedicated capital adequacy norms for co-operative banks.
“It need not be necessarily the same as those already specified for banks,” said Kumar.
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