Union Finance Minister Nirmala Sitharaman on Thursday said the government would consider amending laws to curb malpractices at cooperative banks such as the one discovered at the Punjab and Maharashtra Cooperative Bank last month, NDTV reported. She made the announcement after meeting angry depositors of the bank in Mumbai.
Sitharaman said rural cooperative banks were registered under the Rural Development Ministry and urban ones under the Urban Development Ministry. They are all regulated by the Reserve Bank of India. So when the banks are found indulging in malpractices, the RBI is responsible for the professional handling of the matter, she said.
The minister said the government was monitoring the situation, and directed the secretaries for banking and economic affairs to work together with the rural and urban development ministries and the central bank to study multi-state cooperative banks in detail. The secretaries, along with a deputy governor-level representative of the RBI, will understand “what is happening, what the shortcomings are, and ways in which acts have to be amended”, she added.
“If amendments will help us curb malpractices and better regulate them, and also help us empower the regulator itself, we would like to do it,” Sitharaman said. She added that the government would try to pass any amendments needed in the upcoming Winter Session of Parliament.
Sitharaman also said she would talk to RBI Governor Shaktikanta Das to convey to him the sense of urgency and distress shared with her by the PMC Bank depositors.
Also read: Who is to blame for the mess at PMC bank (and will depositors get their money back)?
The Enforcement Directorate is looking into allegations that the bank did not report all non-performing assets or bad loans after providing funds to a number of companies. The total amount of such loans is estimated to be between Rs 2,000 crore and Rs 2,500 crore.
Last month, the RBI imposed restrictions and said depositors would not be allowed to withdraw more than Rs 1,000 from the bank for six months. The central bank also said PMC Bank would not be allowed to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds. It later increased the withdrawal limit for bank customers to Rs 25,000.
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