Page 23 - Banking Finance July 2020

CO-OPERATIVE BANK NEWS

The Union Cabinet, on June 24, had serve Bank of India, contended that a Government's order rejecting its ap-
given the nod to an ordinance bring- cooperative society might be a state peal against the RBI order.
ing 1,482 urban cooperative banks and subject when it does other activities. On June 25, Justice Pramath Patnaik
58 multi-state cooperative banks, with "There are over 1,937 such banks issued the interim order after consid-
over 86 million depositors and Rs 4.84 which handle over Rs 7.27 trillion of ering the acute financial plights of the
lakh crore deposit, under the ambit of loans, primarily provided to agricultur- depositors in the wake of Covid-19 pan-
the RBI. ists and middle-class people. demic along with submissions made on

The ordinance has been passed only to behalf of RBI and State Government.
Two co-op banks move HC bring the banks under the banking RBI had challenged Justice Patnaik's
against Centre's ordinance regulations and protect the interest of order.
the public," Somayaji said. Senior advocate Ashok Mohanty ar-
bringing them under RBI
Concurring with his submissions, Addi- gued the case for RBI when its petition
Two Co-operative banks in Tamil Nadu, tional Solicitor General of India R was taken up for hearing through
set up more than 100 years ago, Sankara Narayanan also submitted video conferencing. While fixing August
moved the Madras High Court, chal- that when such societies exclusively do 12 as the next date for hearing on
lenging the recent ordinance promul- banking activity, then they fall within RBI's petition, the division bench of
gated by the union government, bring- the purview of Parliament. Chief Justice Mohammad Rafiq and
ing all co-op banks under the supervi- The bench then wondered why the Justice Biswanath Rath issued the in-
sion of the Reserve Bank of India (RBI). terim stay order on Justice Patnaik's
RBI was granting licenses to such soci-
The petitions were filed by Big eties all along to do banking activity if order.
Kanchipuram Cooperative Town Bank they believed public interests are not Justice Patnaik's order had apparently
Ltd and the Velur Cooperative Urban protected. brought a ray of hope for 72,324 de-
Bank Ltd. The court also sought to know from positors who have been left high and

Senior counsel for the banks, P H the ASG what would be the status of dry since the RBI cancelled the licence
of BUCB on October 16, 2014.
Arvind Pandiyan submitted that they societies that involve themselves in
started around 1904. The former was other activities in addition to banking.
the first cooperative bank started in Rajasthan Cooperative
India by the then Madras Governor P Orissa High Court stays in- bank employees' salary
Rajagopalachari and registered the terim order on Baripada doubled from July 1
society that year to organise the coop-
erative movement. Urban Cooperative Bank Employees of Rajasthan Co-operative
The Orissa High Court issued a stay bank facing uncertain times in the
Pandiyan submitted that the ordi- order on a Single Judge Bench's interim wake of COVID-19 have a reason to
nance deals with matters which are order directing the management in- rejoice as the state government has
within the exclusive domain of the charge of Baripada Urban Cooperative doubled their salary from July 2020.
state list, List II of Schedule VII of the
Bank (BUCB) to disburse the money of Rajasthan Cooperative Minister
Constitution, over which Parliament the depositors. Udayalal Anjana said has stated that
has no legislative competence.
RBI had cancelled the BUCB's licence the fixed remuneration payable to pro-
He said the legislations are without after its statutory inspection revealed bation period for officers and employ-
legislative competence and are also that the bank was in deep red, ceased ees appointed by direct recruitment of
contrary to the principles of federal- to be solvent and any chance of its cooperative banks and employees on
ism, which is a basic feature of the revival was next to impossible. compassionate grounds has been in-
Constitution as per the judgment of The bank had filed an interlocutory creased to double.
the Supreme Court in the S R Bommai application (IA) seeking the Court's di- Anjana informed that this increase will
case.
rection for refund of money to the benefit 4 cadres, Senior Manager,
Opposing the arguments, senior coun- depositors during pendency of its main Manager, Banking Assistant and class
sel A L Somayaji, representing the Re- petition challenging the Central 4 category employees. T

BANKING FINANCE | JULY | 2020 | 23