More RBI control over multi state co-ops hailed

The co-operative banking fraternity in the state has welcomed the Centre's plan to introduce a Bill to legitimise the licences issued to multi-state co-operative banks and place the financial regulatory aspects of these banks with the Reserve Bank of India (RBI).

The Banking Regulation (Amendment) and Miscellaneous Provisions Bill, 2004, which was introduced in Parliament earlier this month, will replace an ordinance promulgated on September 29, 2004, to legitimise the licenses issued to multi-state co-operatives by the RBI. The amendments will be with retrospective effect from September 24, 2004.

The September 29 ordinance was issued after the Deposit Insurance Credit Guarantee Corporation of India refused to accept deposits of multi-state co-operative banks, stating that they did not have a licence.

The question of licences to multi-state co-operative banks had arisen after a ruling in the Supreme Court over two multi state co-operative banks of Maharashtra.

Pathiv Adhyaru, chairman, Nutan Nagarik Sahakari Bank, said one of the multi-state co-operative banks of Gujarat, "Whether the power lies in the elected wing (the union co-operation minister) or the administrative wing is a matter of the constitution, and of no concern to the banks, but the amendment will definitely be helpful to multi-state co-operative banks."

Adhyaru said the amendment will also mean that the powers of the RBI will be stated more explicitly.

"The RBI always had the powers, but now they are more explicit. Banks will stand to gain, as there will be just a centre of control, that is the RBI," said Adhyaru. Another co-operative bank official from Saurashtra said with the Bill, the RBI will have complete power over multi-state co-operative banks.

"Until now, while state co-operative banks were under the control of both the Registrar of Co-operatives as well as the RBI, the multi-state co-operatives were under the Union ministry of co-operation. This development will bring them under the RBI control," said the banker.

Gujarat Urban Co-operative Banks Federation chairman R S Patel said the Bill will bring in greater amount of fiscal discipline among multi-state co-operative banks.

"Let the registrar of co-operatives have powers in management aspects including liquidation and other procedures, but it is necessary for RBI to have full control over the financial aspects of these banks," Patel said.

The eight multi-state co-operative banks of Gujarat are Rajkot Nagarik Sahakari Bank, Nutan Nagarik Sahakari Bank, Ahmedabad Mercantile Co-operative Bank, Co-operative Bank of Ahmedabad, Madhavpura Mercantile Co-operative Bank, Kalupur Commercial Co-operative Bank, Gujarat Industrial Co-operative Bank, and Surat Textile Co-operative Bank.