Letter to BS: Bringing co-operative banks under RBI will be tough

This refers to the article “Govt okays Ordinance to give more teeth to RBI over co-operative banks” (June 25). The Union Ca­binet’s approval on Wednesday to an Ordinance to bring 1,540 urban and multi-state co-operative banks under the Reserve Bank of India’s direct supervision to provide added protection and comfort to their depositors, may not necessarily prove to be a win-win situation for them. While the genesis of the Centre’s latest move could be traced back to the infamous Punjab and Maharashtra Co-operative Bank crisis, which had created a massive furore last year, the meticulous supervision of all these co-operative banks, along with the massive network of the commercial banks, may eventually turn out be a herculean task for the central bank.

This view gains more prominence in the wake of the apprehensions expressed by some fi­nance industry experts about the efficacy of the RBI’s extant supervisory bandwidth to effectively deal with these co-operative banks. However, it has be­come incumbent on the RBI to perform creditably on this count.

Vinayak G  Bengaluru

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