How to defuse the co-operative bomb

The minimum capital requirement for a co-operative bank is Rs 1 lakh - an amount that has remained unchanged since 1949

The government is ready to bring in changes in the laws governing multi-state co-operative banks. A three-member committee is being set up to look into the issues and suggest legislative changes to prevent another Punjab and Maharashtra Co-operative (PMC) Bank-like scandal and empower the banking regulator. The changes in legislation could happen as early as during the winter session of Parliament.

It’s fashionable to talk about dual control (by the central bank and the respective state governments) and political interference but the rot is deeper. Not legislative changes alone — the co-operative banking sector needs to be overhauled in every possible