Mumbai (Maharashtra) [India], Dec 5 (ANI): The Reserve Bank of India (RBI) said on Thursday it will take steps to strengthen the safety of depositors dealing with cooperative banks.
The move comes after the recent Punjab and Maharashtra Cooperative (PMC) Bank debacle which left thousands of depositors clamouring for withdrawals amid reports of major financial irregularities, failure of internal control and systems of the bank, and wrong or under-reporting of its exposures under various off-site surveillance reports.
"To reduce concentration risk in the exposures of primary urban cooperative banks (UCBs) and to further strengthen the role of UCBs in promoting financial inclusion, it is proposed to amend certain regulatory guidelines," said the central bank in a statement.
"These measures are expected to strengthen the resilience and sustainability of UCBs and protect the interest of depositors. An appropriate timeframe will be provided for compliance with the revised norms. A draft circular proposing the above changes for eliciting stakeholder comments will be issued shortly."The RBI is also looking to issue structures to address cybersecurity concerns.
It has created a central repository of information on large credits (CRILC) of scheduled commercial banks, all India financial institutions and certain non-banking financial companies with multiple objectives which include strengthening offsite supervision and early recognition of financial distress.
"With a view to building a similar database of large credits extended by UCBs, it has been decided to bring UCBs with assets of Rs 500 crore and above under the CRILC reporting framework. Detailed instructions in this regard will be issued by December 31," said RBI.