G-Secs dealing through brokers barred

The central bank said all state and district central cooperative banks will be required to maintain their investments in G-Secs only in statutory general ledger (SGL) accounts with the RBI or in constituent SGL accounts of banks, primary dealers, depositories and the Stock Holding Corporation of India. The RBI also warned that any violations of the instructions will be viewed seriously by it.

The RBI norm stipulates that banks with deposits over Rs 25 crore have to hold G-Secs only in demat form, while those with deposits less than Rs 25 crore have the option of holding G-Secs either in physical or demat form. In its April 2001 credit policy, the RBI had asked cooperative banks to hold their entire statutory liquidity rations in the form of G-Secs.

But some cooperative banks that have deposits of over Rs 25 crore were still holding securities in physical form, violating the RBI norm. There are around 52 cooperative banks and over 2,000 unscheduled cooperative banks in India. The state of Maharashtra has 29 district cooperative banks and 639 urban cooperative banks, and the state administration is now keeping a close watch on them.