The RBI acted "swiftly and promptly" once the issue came to notice, Das said, referring to the actions taken by the regulator in the PMC Bank case.
The Reserve Bank of India (RBI) will not allow shutting down of any cooperative banks in the country, the central bank Governor Shaktikanta Das assured depositors in the light of the ongoing investigation in the case of Punjab and Maharashtra Cooperative (PMC) Bank.
"RBI will not allow cooperative banks to collapse…Cooperative banks develop their own problems because of so many other factors," Das said on October 4, adding that its discussion with the government on regulatory provisions of cooperative banks is an ongoing process.
The recent discovery of massive fraud in one of the top ten cooperative banks has led to concerns about the health of the same category of banks. Public, in general, are worried about their deposits in cooperative banks despite repeated assurances from the regulator.
Das said that based on one incident, it is not fair to generalize that such is the condition of all cooperative banks. He added that PMC Bank is currently under inspection and the regulator will take a view once the outcome of the internal review is complete.
"Based on this experience we obviously we will give a fresh look at the regulatory framework that is in existence and if any changes are required, we will take it up with the government," Das said.
Das said that there is a big difference in supervision of cooperative banks and commercial banks, owing to their structure which involves members and not shareholders, apart from other legal issues.
The RBI acted "swiftly and promptly" once the issue came to notice, Das said, referring to the actions taken by the regulator in the PMC Bank case. On September 23, the RBI issued directions on PMC Bank leading to restrictions on the lender's business activities for six months. This included limits placed on cash withdrawal at Rs 1000 per depositor, which was later increased to Rs 10,000 and then to Rs 25,000 on further review.
The RBI superseded the bank's board and appointed an administrator to oversee its operations. It has also set up an advisory committee of three members to assist the administrator.
The First Information Report (FIR) registered by the Economic Offences Wing of Mumbai Police showed that the losses of Rs 4355 crore was incurred due to fraudulent activities of PMC Bank top brass and heads of real estate company Housing Development and Infrastructure Ltd (HDIL).
Based on the FIR, the Enforcement Directorate raided six locations in Mumbai and surrounding areas on October 4. The former board members of the bank, along with promoters of HDIL, have been slapped with money laundering charges.The Great Diwali Discount!
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