The Reserve Bank of India (RBI) has implemented a comprehensive set of measures to protect the interests of depositors from financial frauds in cooperative banks, the Union Home and Cooperation Minister Amit Shah informed the Lok Sabha in a written reply on Tuesday.
The Minister said that RBI issued the Master Direction on Fraud Management for Regulated Entities, including Cooperative Banks, in 2024. These directions provide detailed guidelines on fraud reporting, adherence to principles of natural justice, strengthening governance mechanisms, implementation of early warning systems, staff accountability, fixation of responsibility of third parties, and defining the role of internal and external auditors.
He further stated that the Prompt Corrective Action (PCA) Framework has been put in place for identified Urban Cooperative Banks (UCBs). Under this framework, such banks are required to initiate timely remedial measures to restore their financial health and safeguard depositor interests.
Highlighting depositor protection, Shah said that RBI has established a financial safety net through deposit insurance provided by the Deposit Insurance and Credit Guarantee Corporation (DICGC). The DICGC insures all types of deposits, including principal and interest, up to Rs 5 lakh per depositor per insured bank, covering cooperative banks as well.
In addition, RBI has been spreading awareness among the public through its “RBI Kehta Hai” campaign, under which informational material is issued on various types of financial frauds and their modus operandi to help depositors remain vigilant.