New 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.

Moving 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.

"We 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."

The 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.