Delhi Urban Co-operative Banks Federation has penned a letter to the Prime Minister’s Office and sent a copy of the same to the Indian Cooperative for wider publicity. The letter deals with the PMC Bank crisis, the role of RBI, the role of Registrar of cooperatives including the Central Registrar and the role of DICGC. It exhorts the PMO to intervene to save the sector. We reproduce an excerpt of the same- Editor
Prime Minister’s Office, South Block
Raisina Hill; New Delhi-110011
The PMC bank scam has dealt a big jolt to the Urban Co-operative Banking Sector. The entire functioning of the PMC bank has come to a halt, causing immense sufferings to the bank’s depositors. And the crisis has had wider ramifications for the entire cooperative banking sector. That is why we have decided to submit our point of view on the matter for your kind consideration.
i) RBI’s periodical Inspections and audits had detected nothing in bank’s transactions. We have a strong suspicion that the bank had deliberately denied RBI the access to such facts and figures as would suggest anything wrong.
ii) The PMC bank case is a blatant violation of provisions of the B.R. Act, RBI Act and the RBI Guidelines / directions issued under the Ac. The Administrator of the crisis-ridden bank should be a person from the IAS cadre with the experience of the Ministry of Banking/Economic Affairs. Incidentally, RBI officers have very little experience in such matters.
In the same way, the Registrar General of Cooperative Societies would be much more effective in handling the PMC bank case than the RBI functionaries.
Our suggestions. are as follows-
(i) RBI enjoys sufficient powers under the law/acts to control/curb and handle such frauds and provide solutions. There seems to be no urgent need to amend the related laws.
(ii) The state Govt. Registrar/Central Registrar Office may put a cap on the number of members of an urban co-op bank and its deposits with a view to making it manageable.
Central Registrar should be the competent authority to direct multi state Co-operative banks to restrict their activities to the originating states and function under their administrative control.
DICGC (Deposit Insurance & Credit Guarantee Corporation, a subsidiary of RBI) had earned 955 billion rupees so far and had spent on claims just about 60 billion. Huge money is lying with the corporation and funds can be released to meet the needs of the depositors, in the PMC bank case, the fraud amount being nearly Rs.4500/- crore.
Sir, when Madhavpura Mercantile bank Gujarat collapsed following the Ketan Parekh scam, the Gujarat Govt. during your Chief Ministership of the state had released 350 cr to rescue the bank.
Sir, we therefore urge you to kindly instruct the Ministry of Rural Development and RBI, to resolve the matter. We will ever remain grateful to you for this act of favour.
With warm regards.
General Secretary, Delhi Urban Co-operative Banks Federation