Page 24 - Banking Finance August 2021

CO-OPERATIVE BANK NEWS

ness, with effect from the close of busi- The RBI got the power to regulate co- "Now we (UCBs) are under full control
ness. India's leading portfolio manage- operatives last year in June after the of RBI. So, where is the need for BoM?
ment software Ad MProfit VISIT SITE government issued an ordinance to Almost 60 per cent of our Banks are
Sponsored by Further, the Commis- bring 1,482 urban cooperative banks very small. They can't afford the two
sioner for Cooperation and Registrar of and 58 multi-state cooperatives under power centre structure (Board of Di-
Cooperative Societies, Maharashtra, the central bank's supervision. The new rectors and BoM)," Mehta, who is also
has also been requested to issue an rules come in the wake of the collapse President of the National Federation
order for winding up the bank and ap- of several urban cooperative banks, the of UCBs & Credit Societies (NAFCUB),
point a liquidator for the bank. biggest being the Punjab and said.
Maharashtra Cooperative (PMC) Bank
The RBI said Dr Shivajirao Patil where the CEO conspired with some DICGC Bill to benefit Coop-
Nilangekar Urban Co-operative Bank
members to divert funds to real estate
does not have adequate capital and developers. The RBI has asked all coop- erative banks' depositors
earning prospects, and as such, it does erative banks where the CEO is ap- The government's decision to allow
not comply with the provisions of the pointed without its approval to review fund access to depositors of banks un-
Banking Regulation Act, 1949. "The der a moratorium within 90 days is
the fit and proper status of the existing
continuance of the bank is prejudicial expected to benefit the cooperative
MD in terms of present directions.
to the interests of its depositors," it banking sector the most as this seg-
said adding that public interest would RBI extends deadline for ment has seen the maximum morato-
be adversely affected if the bank is al- CO-OP banks riums and liquidation in the last de-
lowed to carry on its banking business cade.
any further. With cancellation of its li- No need for BoM after amendment in The poor governance, lack of technol-
cence, the bank has been prohibited Banking Act, say bankers The Reserve ogy and professional management,
from conducting the business of 'bank- Bank of India (RBI) extended the political interference, and risky assets
ing' that includes acceptance of depos- timeline for constitution of Board of or loan mix have seen the cooperative
its and repayment of deposits with im- Management (BoM) by Urban Co-op-
erative Banks (UCBs) by six months till banking space shrinking over the last
mediate effect. decade.
June 30, 2021.
RBI tightens norms for co- The central bank has conveyed the The Reserve Bank of India (RBI) has
extension in the timeline to state UCB also been quick in taking regulatory
operative banks Federations, including the Gujarat Ur- action against cooperative banks by
Taking a tough stance on the gover- ban Co-operative Banks Federation Ltd putting them under a moratorium and
nance of urban cooperative banks, the (GUCBFL). also initiating the liquidation exercise
if the assets (loans ) are not sufficient
RBI announced minimum qualifications While welcoming the breather for
and age limits for CEOs and whole- UCBs, Jyotindra M Mehta, Chairman, to cover the liabilities.
time directors of these banks as part GUCBFL, observed that since the Bank- The cabinet's approval to the Deposit
of its 'fit and proper' criteria. The rules ing Regulation Act has been amended, Insurance and Credit Guarantee Corpo-
gain significance considering that in conferring greater powers on the Re- ration Bill, 2021, allows the depositors of
many cooperatives the appointment is serve Bank of India (RBI) in dealing banks under the moratorium access to
political, and the central bank is slowly with cooperative banks, the BoM re- their money in savings, current and fixed
tightening its grip over them. quirement should be done away with. deposit accounts within 90 days. T

NSE clarifies freak trade

The National Stock Exchange clarified on the freak trade that raised the price of Nifty Futures contract to 16,546.
"We would like to clarify that on July 5 at the time of market opening, a trading member's dealer placed a manual
buy order for Nifty near month futures in the first few seconds upon opening of the market at a price which was
significantly higher than prevalling price. Since the order was within the operating range, the order matched with
existing sell orders.. and two trades got executed at a price with in the trade execution range," NSE said.

24 | 2021 | AUGUST | BANKING FINANCE