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.
June 12th, 2012 at 22:27
I wish RBI had chased the bigger sharks for not paying back the deposits of a few of the depositors, including sick and orphaned senior citizens and compelled them to pay back the deposits (if not interest portion). This partiality is palpable and comes as a bolt from the blue to the affected depositors. What is more,such defaulting sharks are permitted uninhibited expansion, including privatization. This is quite unbecoming of a central bank of one of the largest democratic countries in the world.
June 13th, 2012 at 16:18
We have Madhavpura Bank like scams almost close to happening. Lot of lending has gone in real estate sector and in companies owned by Directors/Relatives. Gujarat people know this very well because thousands of crores are lost. RBI has to be very strict and ensure that they dispose off assets of defaulters. NPA of 12% (2010-2011) would now have been over 17% and that is a HUGE risk for Indian Banking Sector as a whole.
June 17th, 2012 at 17:00
This was going to happen.There is big nexus between corrupt Cooperative banks and politicians.In 2008 also RBI has even censured OSCB(Orissa state cooperative bank) of 150 crores securities scam and still no action was taken against the officials
June 17th, 2012 at 17:01
link details of securities scam http://www.financialexpress.com/news/rbi-finds-orissa-coop-bank-guilty-in-fraud-case/353280/
June 18th, 2012 at 06:10
This clearly goes to prove that RBI AS A REGULATOR, have failed miserably in all fronts when it comes to controlling the healthy activities of the politican-run co-operative banking sector, not now, but from decades in the past. Why does not the PUC banks fail as often as the cooperative banks? this is a mute question one should address and the Govt. should change their stand on promoting co-operative banks which are sure to”doom” one day or the other, one by one.