In the wake of the scam at Punjab & Maharashtra Cooperative (PMC) Bank, the All-India Reserve Bank Employees Association on October 15 suggested ending the dual jurisdiction of urban cooperatives and bringing them under RBI jurisdiction.
PMC is under regulatory restriction since September 23 after the RBI found that financial irregularities at the bank. Since January, the RBI had placed as many as 24 cooperative banks under its administrator.
“Dual jurisdiction of urban cooperatives under the registrars of cooperative societies of states and RBI should end. It creates unwarranted dichotomy and gives scope for mismanagement and malfeasance. They should come exclusively under the RBI jurisdiction like banks,” the union said.
Urban cooperative banks are registered as cooperative societies either with the State Cooperative Societies Act of each state or under the Multi-State Cooperative Societies Act of 2002. They are regulated and supervised by the Registrar of Cooperative Societies of states or by the Central Registrar of Cooperative Societies.
RBI only regulates and supervises their banking functions and thus has less control on management and carries out on-site inspections and off-site surveillance on them. It also issues operational directions to them to streamline their functioning and to protect the interest of depositors.