On Wednesday, the Union Cabinet decided to bring all cooperative banks under the Reserve Bank of India (RBI) through an ordinance. This was announced by the Union Information and Broadcasting Minister Prakash Javadekar at a virtual press meet.
"Government banks, including 1,482 urban cooperative banks and 58 multi-state cooperative banks, are now being brought under supervisory powers of Reserve Bank of India (RBI)," Javadekar said.
"It will give an assurance to 8.6 crore depositors in these banks that their money will stay safe," he added.
#Cabinet approves an ordinance to bring 1,482 urban and 58 multi state cooperative banks under the supervision power of @RBI. It will give an assurance to 8.6 crore depositors in these banks that their money will stay safe: Union Minister @PrakashJavdekar #cabinetdecisions pic.twitter.com/1voDml0Iiz— PIB India (@PIB_India) June 24, 2020
These banks will come under the supervision of RBI with immediate effect from the date of the President's approval on the ordinance.
The decision comes in the light of the Punjab and Maharashtra Cooperative (PMC) Bank fiasco last year. In her Budget 2020 presentation, Finance Minister Nirmala Sitharaman said that cooperative banks will be brought under the ambit of RBI.
The government also announced to provide 2 percent interest subvention to borrowers under the 'Shishu' category of the flagship Pradhan Mantri MUDRA Yojana (PMMY). Under the Shishu category, collateral-free loans of up to Rs 50,000 will be given to beneficiaries.