Coop bank investments under RBI lens

The Reserve Bank of India (RBI) has asked state cooperative banks (StCBs) and district central cooperative banks (DCCBs) to conduct monthly audit of treasury transactions, following detection of irregularities in their investment portfolios.

The irregularities were observed by the National Bank for Agricultural and Rural Development (Nabard), which is an apex institution accredited with all matters concerning policy, planning and operations in agriculture credit and other economic activities in rural areas.

The central bank has asked all the StCBs and DCCBs to file monthly audits of treasury transactions with it and also with Nabard.

The apex bank has also told the cooperative banks to undertake concurrent audit of their statutory liquidity ratio (SLR) investment portfolios and submit a certificate of holding of securities to the RBI's respective regional office in each quarter.

In view of the irregularities/ deficiencies observed by Nabard in these banks' investment portfolios, RBI wants these banks to diligently undertake half-yearly review of their investment portfolios.

All StCBs have also been told to prepare an approved panel of brokers, which could be used by the DCCBs also. No transaction should be carried out through a broking entity, which is not part of the panel.

StCBs/ DCCBs are not allowed to place funds as deposits with entities such as public sector units (PSUs), companies, corporations, urban cooperative banks and non-banking finance companies (NBFCs).

If any bank has violated these instructions, it should frame a realistic time-bound programme to retire such excess investments, with the approval of the RBI and Nabard and submit a quarterly progress report in this regard.