Central Bank Reiterates Call Over Co-ops Dual Control

Mumbai, October 29: | Updated: Oct 30 2002, 05:30am hrs
The RBI has emphasised the importance of scraping the duality of control over co-operative banks at the earliest for ensuring effective supervision even as the Centre is yet to take a decision on its suggestion to form a separate supervisory authority with the representatives of the Centre, states and other interested parties. The RBI has also prepared a road map for implementation of CAMELS-based supervisory rating mechanism in urban co-operative banks. While RBI will do its best in implementing the final decisions of the Government in this regard, it may be kept in view that in case immediate measures are not taken to remove duality of control, it will be difficult to make the supervisory system effective, RBI governor Bimal Jalan said in the mid-term review of Credit policy on Tuesday.

In view of the local interest involved, it is also clear that there is no consensus at present in favour of removing supervisory and regulatory responsibilities at Central/state government levels, and for entrusting it exclusively to RBI. As a result, the managements and boards of several co-operative institutions continue to reflect political interests rather than genuine co-operative spirit, and are not always amenable to normal banking discipline in their operations, RBI said.