Delhi: The Indian government and the Reserve Bank
of India (RBI) have decided to do away with the regulatory
exemptions granted to cooperative banks under the Banking
Regulation Act, 1949.
towards a uniform regulatory environment for all types
of banking entities, the ministry of finance and the RBI
have arrived at a consensus to either scrap the separate
Chapter V of the Act titled ''Application of the Act to
Cooperative Banks'' or drastically amend it to remove all
the major exemptions.
have now arrived at a consensus to tighten the provisions
of the Act as far as the exemptions for cooperative banks
go," says a top finance ministry official. "The
chapter granting relaxations from regulations to the sector
may be removed altogether. Alternatively, we may have
to go in for large-scale amendments to the chapter."
scrapping of Chapter V will also result in bringing about
a total control of the RBI over the sector and would eliminate
Nabard''s role in the regulatory environment. "The
changes in the Act
will be aimed solely to give the RBI complete control
over the regulation of the sector, including the imposition
of stringent penalties for disobeying the bank''s orders,"
the official says.