Page 26 - Banking Finance April 2023

Co-Operative Bank

News

RBI imposes restrictions The RBI, however, said the directions had been elected as its chairman, op-
should not per se be construed as can- posing Shinde's decision.
on Musiri Urban Co-opera-
cellation of the banking licence.
According to the plea, the CM's order
tive Bank; caps withdrawal
"The bank will continue to undertake was passed at the behest of local poli-
at Rs 5,000 per customer banking business with restrictions till ticians allocated to the Incharge-Min-
ister," the court said in the order.
its financial position improves," it said,
The Reserve Bank of India imposed a
adding that it may consider modifica- The CM was not the head of the "Co-
Rs 5,000 cap on withdrawals by indi-
tions of the directions depending upon operation Department", but the said
vidual customers from Tamil Nadu-
circumstances. department was assigned to a sepa-
based Musiri Urban Co-operative Bank
rate minister, the bench said. "There
as part of several restrictions slapped
is no authority/power vested in the
on the lender due to its deteriorating Bombay High Court
Chief Minister as per Rules of Business
financial condition. The restrictions on
quashes CM Shinde's deci- and Instructions to have supervisory
the lender will remain in force for six
powers over the decision taken by the
months from the close of business on sion over recruitment in
concerned Minister. Nor do the Rules
March 3 and are subject to review, the
co-op bank; slams him for indicate that the Minister is subordi-
RBI said in a statement.
nate to the Chief Minister as regards
interference
With curbs in place, the cooperative independent functioning of a depart-
bank, without approval of the RBI, The Nagpur bench of the Bombay High
ment assigned to him by the Rules," it
cannot grant loans, make any invest- Court has quashed the decision of added.
ment, and disburse any payment. The Maharashtra Chief Minister Eknath
The court further held that the minis-
lender cannot also dispose of any of its Shinde to stay the recruitment process
ter in charge of a department is re-
properties, among others. of a co-operative bank, noting that the
sponsible for the affairs thereof and the
CM has no powers to review or modify
"In particular, a sum not exceeding Rs minister's directives would assume the
the calls taken by the minister con-
5,000 of the total balance across all sav- character of an order passed by the
cerned. A division bench of Justices
ings bank or current accounts or any state government.
Vinay Joshi and Valmiki SA Menezes in
other account of a depositor, may be al-
"No doubt the order of granting per-
its order of March 3 termed Shinde's
lowed to be withdrawn...," the RBI said.
mission for recruitment is of adminis-
decision "wholly unwarranted and
Further, it said that eligible depositors trative nature which can be reviewed,
without authority of law".
would be entitled to receive deposit in- but only by the In-charge-Minister. The
The order was passed on a petition
surance claim amount of his/her de- intervention of the Chief Minister is not
filed by Chandrapur District Central authorized under the Business Rules
posits up to Rs 5 lakh from the Deposit
Insurance and Credit Guarantee Corpo- Cooperative Bank Ltd. and a business- and the Instructions issued thereun-
ration. man named Santoshsingh Rawat, who der," it said.
22 | 2023 | APRIL | BANKING FINANCE