Cabinet Approves Ordinance to bring UCBs and MSCBs under RBI supervision
The decision to bring Urban Cooperative Banks (UCBs) and Multi-State Cooperative Banks (MSCBs) under the supervision of India’s Central Bank- the Reserve Bank of India (RBI) was taken on 24th June 2020 during a meeting of the Union Cabinet.
The ordinance will immediately come into effect from the date of signature of the President of India.
The decision was taken by the Government following the financial irregularities of the Punjab & Maharashtra Cooperative (PMC) Bank that was unearthed in the month of September 2019.
Benefit for Depositors
RBI’s supervision means that the 8.6 crore depositors of these 1482 UCBs and 58 MSCBs around the country will be able to get the added protection and comfort that are at present applicable for the scheduled commercial banks in the country, such as Bank Deposit Insurance to per depositor of up to Rs 5 lakh, etc.
Announced During the Finance Budget
Earlier on 1st February 2020, the Finance Minister during her Budget Speech had announced that the Cooperative Banks will be brought under the Supervision of RBI. The Cabinet cleared the amendment Bill on 5th February 2020 following which the Banking Regulations (Amendment) Bill, 2020 was introduced in Lok Sabha on 3rd March 2020. However, the Bill could not be passed as the Budget Session was curtailed due to the outbreak of the global COVID-19 pandemic.