RBI and Nabard favor putting ‘eligible cooperative banks’ beyond the scope of the Financial Resolution and Deposit Insurance (FRDI) Bill, reports Business Line.
As per a Clause of the Bill, ‘eligible cooperative banks’ are taken as ‘insured service providers’ for two years, extendable by one year. The Bill also provides for the liability of the proposed Resolution Corporation (RC) to insured depositors of eligible cooperative banks.
The RBI says as per the Bill, an eligible co-operative bank is defined as a co-operative bank other than a multi-state co-operative bank, and if the RC wants the power to supersede the board of a bank or to wind one up, the State cooperative law will have to be amended.
The RBI has urged the panel to seek clarification from the Center about putting eligible cooperatives under the FRDI’s ambit.
Nabard says incorporation, registration, election to the board/committees, audit and winding up of cooperative societies are governed by the State Cooperative Acts. It told the panel that the definition of the eligible cooperatives must accord with the provisions of the State cooperative Acts.
