(a) whether the Government are aware that co-operative banks in Gujarat arefacing closure;
(b) if so, whether the RBI has initiated any investigation in this regard; and
(c) if so, the outcome thereof and the action taken thereon?
(a) whether the Government are aware that co-operative banks in Gujarat arefacing closure;
(b) if so, whether the RBI has initiated any investigation in this regard; and
(c) if so, the outcome thereof and the action taken thereon?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE AND COMPANY AFFAIRS
(SHRI ANANDRAO VITHOBA ADSUL):
(a) to (c) It is not correct to say that the co-operative banks in Gujarat are facing
closure. However, some of the Urban Co-operative Banks are facing liquidity crunch
subsequent to the crisis of Madhavpura Mercantile Co-operative Bank Ltd. Reserve Bank
of India (RBI) has reported that it has reviewed the transactions of urban co-operative
banks in government securities which revealed certain irregularities like extention of
credit facilities to brokers in violation of RBI`s guidelines, violation of prudential
norms for transactions through individual brokers, etc. RBI has taken several steps to
strengthen the system of regulation and supervision on Urban Cooperative Banks. These
include, putting ceiling on operations in call money market and bank finance against
shares and debentures, increase in percentage of SLR investments in Government Securities,
restrictions on interest rates on deposits offered by UCBs and investment of funds as
deposit with other UCBs, etc.