This refers to the article “Govt okays Ordinance to give more teeth to RBI over co-operative banks” (June 25). The Union Cabinet’s approval on Wednesday to an Ordinance to bring 1,540 urban and multi-state co-operative banks under the Reserve Bank of India’s direct supervision to provide added protection and comfort to their depositors, may not necessarily prove to be a win-win situation for them. While the genesis of the Centre’s latest move could be traced back to the infamous Punjab and Maharashtra Co-operative Bank
crisis, which had created a massive furore last year, the meticulous supervision of all these co-operative banks, along with the massive network of the commercial banks, may eventually turn out be a herculean task for the central bank.
This view gains more prominence in the wake of the apprehensions expressed by some finance industry experts about the efficacy of the RBI’s extant supervisory bandwidth to effectively deal with these co-operative banks. However, it has become incumbent on the RBI to perform creditably on this count.