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Issues relating to urban cooperative banks, extension of enforcement policy and framework to cooperative banks and non-banking finance companies (NBFCs), among others, engaged the attention of members of the Reserve Bank of India’s central board in its meeting on Friday.
This comes in the backdrop of the massive fraud at Punjab and Maharashtra Co-operative (PMC) Bank and debt defaults by IL&FS and DHFL.
While PMC Bank depositors have been severely affected due to restrictions placed by the RBI on withdrawal, debt defaults by IL&FS and DHFL are fraught with systemic implications as banks, mutual funds, insurance companies, pension funds have lent to these NBFCs.
Enforcement action can have a deterrent effect in terms of money and reputation for lenders, including co-operative banks and NBFCs.
The board, which met in Bhubaneswar under the Chairmanship of RBI Governor Shaktikanta Das, also reviewed the current economic situation and domestic and global challenges.
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