The Reserve Bank Employees Association on Thursday welcomed the government's decision to bring all cooperative banks under RBI supervision and requested the central bank to focus on on-site inspection of these banks rather than off-site surveillance.
The government on Wednesday said all urban cooperative banks (UCBs) and multi-state cooperative banks will come under the supervision of RBI.
The President of India will promulgate an ordinance to this effect, Information and Broadcasting Minister Prakash Javadekar had said.
Currently, there is dual control over UCBs by the RBI and the state where they are registered. The RBI regulates and supervises the banking functions of UCBs. It carries out on-site inspections and off-site surveillance of UCBs.
In a letter to RBI Governor Shaktikanta Das, the All India Reserve Bank Employees Association (AIRBEA) said the recent PMC Bank case has triggered a country-wide resentment about the affairs and modus-operandi of such banks where depositors' funds were put at risk, forcing the RBI to take punitive steps.
"The government has now decided to change the dual control regimen of urban co-op banks to total RBI monitoring. This will definitely put the myriad of depositors of such banks at ease," according to the letter, seen by PTI.
The decision will bring in 1,540 urban cooperative banks and multi-state cooperative banks under the RBI supervisory process, as applicable in the case of scheduled commercial banks.
There are 1,482 urban cooperative banks and 58 multi-state cooperative banks having about 8.6 crore depositors with a total savings deposit of about Rs 4.85 lakh crore.
The union further said, "RBI must initiate on-site supervision and inspection of these small and medium-sized banks, instead of depending on data furnished by them as is done in off-site surveillance which are prone to be fudged as our experiences in Punjab and Maharashtra Cooperative (PMC) Bank and some others bear out."
AIRBEA said it will extend all support and cooperation to the RBI in monitoring the cooperative banks.
"We reiterate in this connection that post- 2012 highly qualified, computer savvy, and energetic Class III staff of the Bank can be gainfully deployed for the purpose after proper training, which will secure good results and will be cost effective too...," it added.