Rbi Seeks Report On Exposure Of Cooperative Banks

The Reserve Bank of India (RBI) has written to cooperative banks in the western region especially those based in Gujarat and Maharashtra asking them to report on the quantum of funds they had parked in CRB Capital Markets Ltd (CRB).

While RBI is still in the process of ascertaining the exposure of cooperative banks to CRB, official sources say the figure of Rs 60 crore that is being suggested could be on the higher side. According to them, the RBI has confirmed from nine urban cooperative banks that they did place funds in the fixed deposit program of CRB. The funds that have been placed by these nine banks is to the tune of Rs 15 crore. Preliminary indications are that the cooperative banks from Gujarat, especially those from the districts of Mehsana and Kheda, are those who have subscribed to the fixed deposit programme of CRB. Within the next couple of days, the RBI should have the exact figure on the exposures.

 

According to sources, all cooperative banks have to inform RBI before they can deploy funds in non-bank finance companies. The RBI in the recent past has given more operational freedom to these banks to deploy funds. However they still have to report to the RBI on advances or investments outside the realm of cooperative set up. There appears to be a flagrant violation of norms with the cooperative banks not giving the correct picture on funds to RBI. In the past when RBI has detected irregularities with respect to funds deployment it has asked for corrective action.

RBI could also seek an explanation from the management of the cooperative banks on why they did not report the fact that they have parked funds in the CRB fixed deposit programme.