The way cases of violation of RBI norms by Urban cooperative banks are coming, there is strong doubt if these banks could be counted as reliable carrier through which government could alleviate the condition of the poor.
The modus operandi in majority of cases is to give loan either to one of the Directors of the board of Urban cooperative bank or his relatives. Norms are flouted and RBI guidelines are thrown to the winds in such cases of patent favouritism.
On Monday again the Reserve Bank of India has imposed a monetary penalty of rupees one lakh on The Jai Bhavani Sahakari Bank Limited, Pune, in exercise of powers vested in it for violation of Reserve Bank of India’s directive on Directors related loans.
The Reserve Bank of India had issued a show cause notice to the bank, in response to which the bank submitted a written reply. After considering the facts of the case and the bank’s reply in the matter, the Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of the penalty.
Only a few days back Indian Cooperative.com has reported the violation of RBI guidelines by Muslim Cooperative bank of Pune.
The story of Madhavpura cooperative bank is too well known to need recall here.
There is scams galore in urban cooperative banks coming to media from time to time. Two cooperative sector lenders — Surat Mercantile Co-operative Bank and Urban Co-operative Bank, Cuttack were fined by the Reserve Bank with a penalty of Rs.5 lakh due to the reason being violation of certain banking norms.
Even the Maharashtra Deputy Chief Minister and nephew of Maratha strongman Sharad Pawar Ajit Pawar’s close aid Shivaji Kale has been charge sheeted in one of such case involving an urban cooperative bank in Pune.
The Reserve Bank also imposed penalties of Rs1 lakh each on four cooperative banks on various charges including violation of anti-money laundering guidelines.
The four banks are the Jamnagar Mahila Sahakari Bank, Amreli Nagarik Sahkari Bank, Shri Mahila Sewa Sahakari Bank, Ahmedabad, and the Virambam Mercantile Cooperative Bank, the RBI said in different statements.
Surprisingly all such cases are from the year 2011 alone. If we ferret out the data from past, no space would be enough.
There are some people who are doing good work and because of whom the trace of reliability is there. Persons like Ela Bhatt and Chetan Sinha are welcome relief from the thugs mostly dominating urban cooperative bank scenario. Chetna Sinha has become a source of inspiration and hope for the poor women in the forgotten town of Satara district in Madhya Pradesh and has been recognized by Obama administration. Similarly Ela bhatt is being awarded by Harvard University in May,2011.
But are such examples enough?
This is high time urban cooperative banks should mend it ways else the public resentment and governmental harsh action would ensure their untimely burial.