The Union Cabinet on Wednesday approved amendments to the Banking Regulation Act to give the Reserve Bank of India greater control over cooperative banks .
RBI’s Recent Moves
Since the collapse of the Punjab and Maharashtra Cooperative Bank, the RBI has been toughening its stance.
In January, the regulator introduced a new supervisory action framework for urban cooperative banks, akin to the prompt corrective action programme used for weak scheduled commercial banks.
On Dec. 31, the regulator issued final rules for constituting the Board of Management for UCBs with a deposit base of more than Rs 100 crore. These rules included a mandatory RBI clearance for CEO appointments by urban cooperative banks.
In a separate draft circular on Dec. 30, the regulator proposed changes in the single and group borrower limits for UCBs.
On Dec. 27, the regulator mandated that urban cooperative banks with a loan book of over Rs 500 crore will be required to report large exposure information, including the classification of special mention accounts, to the RBI’s central repository for information on large credit.
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