Finance Minister Nirmala Sitharaman assured law and regulatory framework for the co-operative sector in the winter session of Parliament to protect depositors .
Ms. Sitharaman has asked an official committee that includes the Banking Secretary and Department of Economic Affairs Secretary in the Finance Ministry, as well as a Reserve Bank of India Deputy Governor, to check the legal framework governing co-operative banks .
All options, including a fresh look at the Financial Resolution and Deposit Insurance (FRDI) Bill, are under consideration, the Minister said.
While addressing a press conference in Mumbai Ms. Sitharaman also saw protesting PMC depositors at the BJP’s State headquarters and met them
She had assured them that she will have a fresh word with the RBI Governor to try to hasten the lifting of withdrawal restrictions of ₹25,000 currently applicable. While the RBI regulates multi-State rural co-operative banks and urban co-operative banks, their registration is governed by the Rural Development and Urban Development Ministries, the Minister said .
“Therefore, in such instances, where there is some malpractice and the boards get bypassed, the Reserve Bank takes care of placing a resolution professional that takes care of the matter. I also told the affected PMC customers this doesn’t mean that the Government of India is doing nothing about it,” Ms. Sitharaman said
“I have asked the Secretaries in Ministry’s for banking and economic affairs to work with the Ministries of Rural and Urban Development to study in detail what is happening in multi-State co-operatives that also run banks. The RBI will also be represented of course, to understand where there were shortcomings and, if necessary, look at the ways in which the respective Acts can be amended,” Ms. Sitharaman said.
“If the amendments are going to help us curb malpractices, with better regulation and empowerment of the regulator, then we would like to do that. Necessary legislative steps will be taken to prevent such things from happening again in future and allow the regulator even better, if there are shortcomings,” the minister stressed, adding that the government will work to bring in necessary changes in the forthcoming Winter session of Parliament.