New Delhi: The Union government on Wednesday announced approval to a decision to bring 1,540 cooperative banks that hold close to Rs 5 lakh crore worth of deposits from 8 crore lakh account holders, under the purview of Reserve Bank of India (RBI). These banks will be supervised by the RBI in the same fashion as the scheduled banks, offering protection to depositors and reducing the space for mismanagement.

“All urban cooperatives and multistate cooperative banks are being brought under the supervision of the Reserve bank of India. There are 1,540 such banks that hold close to Rs 5 lakh crore worth of deposits from over 8 crore lakh account holders. The move to bring them under the RBI will give depositors the assurance that their savings are safe in these banks,” Javadekar said.

अपने देश में 1,482 अर्बन कॉपरेटिव, 58 मल्टीस्टेट कॉपरेटिव बैंक है।आज इनके बारे में अध्यादेश पारित किया है, यह राष्ट्रपति के पास जायेगा।यह सभी बैंक तुरंत प्रभाव से RBI के सुपर विज़न पावर में आजायेंगे। इससे मूल फायदा यह होगा की जमाकर्ताओं को यकीन मिलेगा की हमारा पैसा सुरक्षित रहेगा pic.twitter.com/ACI6GU3Rxo

— Prakash Javadekar (@PrakashJavdekar) June 24, 2020

Earlier this year in February, finance minister Nirmala Sitharaman had announced the government’s intention to bring the cooperative banks under RBI’s supervision and said that it will be done through an amendment to the Banking regulation act. Javadekar said the government had issued an ordinance in this respect on Wednesday.

According to the new dispensation, the appointment of CEOs in such cooperative banks will now require prior approval from the regulatory authority- the RBI.