Co-operative Banks to be under the supervision of RBI | Arriba Trends

Co-operative Banks to be under the supervision of RBI


The Union Cabinet has approved the decision to extend the supervisory power of the Reserve Bank of India (RBI) over the co-operative banks in the country.

The announcement of this approval was made along with the announcement of the year-long ₹1,542 Crore interest subvention scheme for microloan borrowers.

The slew of proposals approved also included the clearing of a ₹15,000 crore fund for animal husbandry that was announced as a part of Aatmanirbhar Bharat Abhiyan stimulus package and added to the list of already announced reforms to boost private sector participation in the space sector and the upgrade of Kushinagar Airport in Uttar Pradesh to international.

As a result of the decision, around 58 multistate co-operative banks and 1,482 urban cooperative banks will come under the central bank’s supervision.

This will be of particular benefit for the financial system as the co-operative banks had been a weak link to due to its lack of adequate supervision and oversight. The move is expected to bring much demanded financial stability in the financial sector. It will also hold the co-operative banks more responsive to the depositors who entrust their money with the banks.

However, some fear that this decision will result in is the increased indirect control over the policies of the banks that will be subject to review.

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