Surveillance for urban co-op banks
By Uday Chatterjee | 20 Sep 2001
Mumbai: The Reserve Bank of India (RBI) has introduced offsite surveillance for urban cooperative banks (UCBs).
Under the system, the UCBs are required to submit returns in a prescribed form at quarterly intervals with reference to their financial position as on 31 March, 30 June, 30 September and 31 December. This system has been introduced following the scams that occurred in the Madhavpura Mercantile Cooperative Bank (MMCB).
It may be recalled that MMCB had violated regulatory norms by providing exposure of about 68 per cent of its advances to companies linked with stockbroker Ketan Parekh. Consequent to the stock market crash, about 96.2 per cent of MMCBs deposits, amounting to Rs 1,166.04 crore, were wiped out along with the banks paid-up capital and reserves.
The RBI has assured the joint parliamentary committee probing the scam that steps initiated by the central bank during the past few months will help supervise the activities of the UCBs and in finding out frauds, if any, committed by them.
The RBI said the off-site surveillance system combined with on-line inspection will help the bank to ensure the safety of investors funds. Further, officials of the Urban Banks Department of the RBI, or those deputed by them, will pay periodical visits to the UCBs under their jurisdiction.
