Question : Notices under Section 35A

(a) the number and names of cooperative banks who have been given a notice under Section 35A of the Banking Regulation Act year-wise during the last three years;
(b) the existing policy framework regarding cooperative banks in the country;
(c) the details about the reforms brought in since 2014 to improve the structure and banking functions of cooperative banks in the country; and
(d) whether the Government is pondering over any robust improvisations/modifications in the cooperative banking sector given their importance in catering to banking needs at the grassroots level, and if so, the details thereof?

MINISTER OF COOPERATION
???????? ?????? (SHRI AMIT SHAH)

(a): Since January 1, 2019, 23 Urban Co-operative Banks have been placed under Directions under Section 35A read with Section 56 of the Banking Regulation Act, 1949. Year-wise data is furnished in the Annexure 1. However, no such notice under Section 35A of the Banking Regulation Act, 1949, as applicable to Cooperative Societies (AACS) has been given to any State Co-operative Bank (StCB)/ District Co-operative Bank (DCCB) in the last three years.

(b): State Co-operative Banks/ District Central Co-operative Banks are regulated by RBI under the provisions of the Banking Regulation Act, 1949 (AACS). Further, as the co-operative banks are incorporated as co-operative societies, the related matters are being regulated by the state/ central governments to that extent. State Co-operative Banks/District Central Co-operative Banks are being periodically inspected by NABARD under the provisions of Section 35 (6) of the Banking Regulation Act, 1949 (AACS). RBI issues instructions, circulars, guidelines and notifications to State Co-operative Banks and District Central Co-operative Banks under the provisions of the Banking Regulation Act, 1949 (AACS).

Contd…2/-
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(c) & (d): Following are the details about the reforms brought in since 2014 to improve the structure and banking functions of cooperative banks in the country:

1. A roadmap was provided to co-operative banks for achieving a minimum Capital to Risk Weighted Assets (CRAR) of 7 per cent on an on-going basis by March 31, 2015 and 9 per cent by March 31, 2017. Further, StCBs/ DCCBs were permitted to issue Long Term (Subordinated) Deposits (LTD) and Innovative Perpetual Debt Instruments (IPDI) subject to conditions.
2. Pursuant to the amendments to the B.R. Act, 1949 (AACS), CRR and Statutory Liquidity Ratio (SLR) for all cooperative banks were brought on par with scheduled commercial banks in 2014.
3. StCBs and DCCBs were allowed to shift their Statutory Liquidity Ratio (SLR) term deposits to approved securities in phases by 2017.
4. The Banking Regulation (Amendment) Act, 2020 (39 of 2020) was notified for the State Co-operative Banks (StCBs) and District Central Co-operative Banks (DCCBs) with effect from, April 1, 2021. The amendment seeks to protect the interests of depositors and strengthen co-operative banks by improving governance and oversight.