THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL):
(a) and (b) Reserve Bank of India (RBI) has reported that a quick scrutiny of the
Madhavpura Mercantile Co-operative Bank Ltd., (MMCB), Ahmedabad has revealed that as many
as 164 cooperative banks have placed sizeable deposits with the said bank. The impact of the
crisis on these banks will have to be assessed on the basis of their financial position as
on 31 March, 2001 as also by taking into account any revival plan, which may be received from
the Administrator of MMCB.
(c) and (d) As reported by RBI commercial banks including private sector banks have been
allowed to invest their funds in shares/debentures, public sector undertaking bonds and
units of Mutual Funds including Unit Trust of India, subject to the condition that overall
exposure to sensitive sectors, private sector banks` exposure to capital market by way of
investment in shares/debentures/units of Mutual Funds through primary or secondary markets
does not exceed 5% of their total outstanding domestic credit as on March 31 of the previous
year.
(e) and (f) RBI has reported that as per data collected from all commercial banks as
on 31st January, 2001, two private sector banks viz. Karnataka Bank Ltd. and Development
Credit Bank Ltd. have violated the above 5% ceiling. The investmetns of these two banks
aggregated 5.8% and 8.29% respectively. RBI had taken up the matter with these two banks
and the Karnataka Bank Ltd. has since rectified the excess and brought down the outstanding
investment to 5%, as on 31 March, 2001. It has been advised to adhere to the 5% norm in future.
Development Credit Bank has explained that the excess investment was wrongly reported to
RBI on account of inclusion of certain investments in UTI`s MIP Scheme which were strictly
not covered under bank`s exposure to Capital Market.
