Reserve Bank of India (Aniruddha Chowdhury/Mint)
Reserve Bank of India (Aniruddha Chowdhury/Mint)

RBI employees union calls for onsite supervision of cooperative banks by central bank

  • The Reserve Bank of India (RBI) on Monday increased the withdrawal limit for customers of PMC Bank to 40,000
  • On 23 September RBI barred the PMC Bank from carrying out any operations for the next six months

NEW DELHI : The All India Reserve Bank Employees Association (AIRBEA) on Tuesday suggested regular onsite supervision of cooperative banks by the Reserve Bank of India (RBI) in the aftermath of the Punjab and Maharashtra Cooperative (PMC) bank fiasco.

“All cooperative banks, particularly their head-offices should be brought under regular onsite supervision by RBI instead of the off-site surveillance as at present which cannot detect fraudulent reporting," said Samir Ghosh, general secretary, AIRBEA.

Ghosh also called for abolition of dual jurisdiction of the Registrar of Cooperative Societies of states and RBI over cooperative banks. “It creates unwarranted dichotomy and gives scope for mismanagement and malfeasance. They should come exclusively under RBI jurisdiction like banks," he said in the statement.

The RBI on Monday increased the withdrawal limit for customers of Punjab and Maharashtra Cooperative (PMC) Bank to 40,000 and said that this is inclusive of the 25,000 allowed earlier.

“The Reserve Bank of India, after reviewing the bank’s liquidity position and its ability to pay its depositors has decided to further enhance the limit for withdrawal to 40,000, inclusive of 25,000 allowed earlier. With the above relaxation, about 77% of the depositors of the bank will be able to withdraw their entire account balance," the central bank said on Monday.

The central bank also said that based on a complaint filed by the PMC Bank against its officials and borrowers associated with the fraud and financial irregularities in the bank and manipulation of its books of accounts, the Economic Offences Wing (EOW), Maharashtra Police has started its investigations into the matter.

On 23 September, RBI barred the bank from carrying out any operations for the next six months. It had initially capped the deposit withdrawal at 1,000 per account which was relaxed to 10,000 in two days and then further increased to 25,000. The central bank's action came after it found certain irregularities in the bank, including under-reporting of non-performing assets (NPAs) and large deposit withdrawals.

Meanwhile, the Reserve Bank Officers' Cooperative Credit Society Ltd (RBOCCS) has fixed deposits totalling 105 crore with PMC Bank which was put under restrictions of the central bank. According to the FY19 annual report of RBOCCS, the quantum of the fixed deposit was at 96 crore at the end of FY18 and has increased 9% since then. This deposit is part of the cooperative society’s investments of 478.64 crore in fixed deposits, short term deposits and shares of one cooperative bank. Of this, 473.36 crore is in fixed deposits, 5 crore is in a short-term deposit. It also owns 2,784 shares of 1,000 each of Mumbai District Central Cooperative Bank. All the deposits are in various cooperative banks, showed the annual report.

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