The Union Finance Minister P Chidambaram has singled out urban cooperative banks for his trenchant comments for their deep involvement in money laundering activities. He said it is a serious crime and licenses of the erring banks should immediately be cancelled.
The minister was addressing a top official meeting to brainstorm ways and means of streamlining the economic intelligence system in the country.
According to the minister, UCBs have a deep penetration across the country and therefore RBI should take all possibe measures to curb their criminal activities without delay.
Experts say the problem of reigning back UCBs is compounded by the duality of control. While the apex bank regulates their loan grants and deposit mobilization, other important activities of these banks are overseen by multi-state cooperative societies or state cooperative societies.
Some knowledgeable sources say UCBs have lately outdone even the scheduled commercial banks in helping undesirable elements launder their money. If UCBs want to launder their reputation, they have to stop participate in money laundering activities, they add.
There are 1,645 UCBs in the country with a network of 8,150 branches. They boast an astronomical amount of Rs. 2 lakh crore of deposits and advances valued at Rs. 1.3 lakh crore.