The Union Cabinet on Wednesday approved amendments to the Banking Regulation Act to bring cooperative banks under the regulatory mechanism of Reserve Bank of India. The government has taken this move in the wake of the Punjab and Maharashtra Co-operative (PMC) Bank crisis.

The move will ensure greater accountability and transparency in the functioning of cooperative banks, Information and Broadcasting Minister Prakash Javadkar said after the Cabinet meeting.

Javedkar said the cooperative banks need to fulfill regulatory requirements set for scheduled commercial banks.

The provisions would give Reserve Bank of India (RBI) the power to take control of weak co-operative banks. As per the new proposals, cooperative banks will need to take RBI approval for the appointment of CEO and do audits as per RBI guidelines.

In September 2019, the RBI had restricted operations of the PMC Bank for six months after a multi-crore scam came to light following which the deposit withdrawal was initially capped at Rs 1,000, causing panic and distress among depositors. The withdrawal limit was increased gradually to Rs 50,000.The apex bank had superseded the board of the PMC Bank and appointed Jai Bhagwan Bhoria as the new administrator of the embattled lender with all the powers of the board. #casansaar (Source - BusinessToday)