Replying to NAFCUB President Jyotindra Mehta’s charge without taking his name on the issue of discrimination (YES Bank Vs PMC), RBI has expressed its inability to interfere in UCBs’ affairs the way it can in the case of private banks due to the statutory compulsions.
The Nafcub President had earlier alleged that the RBI treats the depositors of UCBs differently from that of commercial banks. A glaring example is its difference of treatment in two identical cases- YES Bank and the PMC Bank, he had underlined.
In a communication aimed at extending the current Direction on PMC Bank, RBI hinted at its inability. The release from RBI read “It must be noted that unlike in the case of commercial banks, the Reserve Bank has no powers to draw up an enforceable scheme of reconstruction of a cooperative bank.”
“Nevertheless, in the interest of the depositors and the stability of the cooperative banking sector, the Reserve Bank of India, in consultation with various stakeholders and authorities, is trying to work out a scheme for revival of the bank, ” the RBI release does not either mention Nafcub or its President and makes a general distinction between its current mandate vis a vis co-op banks and others.
The Reserve Bank has been closely monitoring the situation and holding regular meetings with the Administrator and the Advisory Committee of the PMC Bank, said RBI release while extending the Direction for a further period of three months from March 23, 2020 to June 22, 2020, subject to review.
Mumbai Mirror, has also meanwhile quoted Satish Marathe, one of the founding members of Sahakar Bharati who is also on the board of RBI saying “For the last two-three years, we were advocating with the RBI and the Finance Ministry to amend the Banking Regulation Act and bring cooperative banks completely under the regulation of the RBI.”
This year, Finance Minister Nirmala Sitharaman accepted our plea and announced in the budget to bring better oversight by the RBI on cooperative banks and now, the government has also introduced a Bill to amend the Banking Regulation Act to improve RBI’s regulation over cooperative banks.”
Cooperative banks are regulated by both the state government and the RBI and in the case of cooperative banks like PMC Bank, which are multi state cooperative banks, are regulated by the Central Registrar of Cooperative Societies, which means they are regulated by the central government.
“Because of which, RBI doesn’t have powers to initiate actions like restructuring of capital and reconstruction of the bank, which it could do in the case of Yes Bank. However, after the Parliament amends the act, the RBI will be empowered to do so in the case of cooperative banks also,” claimed Marathe.