The RBI has put scores of cooperative banks in the country under scrutiny as the lenders failed to meet the basic norms on capital and net worth. The apex bank has stopped the lenders from getting deposits from the public.
The RBI move is intended to change the way the hapless banks are working. The banks are expected to bring about a discernible improvement in their situation. Otherwise, they would be in trouble.
Officials of the RBI and Nabard would be responsible for keeping an eye on how these banks are working to overcome their difficulties.
According to Nabard Chairman, there were altogether 50 cooperative banks that were threatened with closure. Of them, 8 cooperative banks could meet the norms while 42 banks could not meet the norms and have therefore been put under watch.
According to an estimate, the country has 30 state and 370 district central cooperative banks. The total deposits of these banks counted 2.31 trillion and their total assets were worth 3.39 trillion in 2010.
As per recommendations made by a panel, the cooperative banks should not have excessive non-performing assets nor should they indulge in any financial irregularities. The banks are supposed to have at least a net worth of 1 lakh.
The RBI is of the opinion that these banks are badly managed and are seriously compromised by graft and corruption spreading through them.