The government is likely to scrap dual control of the Reserve Bank of India (RBI) and the registrar of cooperatives over urban cooperative banks, and also ease the norms for placing deposits between them.
The RBI had imposed stringent restrictions on urban cooperative banks following the gilts scam involving Madhavpura Mercantile Cooperative Bank and Home Trade.
A draft report by a panel of MPs, headed by minister of state for finance and banking Anant Geete, is also expected to suggest scrapping the dual control over urban cooperative banks through a law.
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The recommendations of the draft report, to be submitted tomorrow, gains credence since the panel was set up by Union finance minister Jaswant Singh to study the functioning of over 2,000 urban cooperative banks, and suggest measures to prevent scams.
The other members of the panel include Eknath Thakur, Prithviraj Chauhan, Nitish Sen Gupta, B Ramaiah, Murli Deora and S S Ahluwalia.
The panel feels the 2,000 urban cooperative banks, which played a significant role in Maharashtra, Gujarat, Karnataka and Andhra Pradesh, must be guided by a strict banking norms.
The panel feels a suitable law can be introduced to hand over