The government on Wednesday said that all urban cooperative banks and multi-state cooperative banks will come under the supervision of the Reserve Bank of India, a development aimed at providing comfort to depositors and prevent repeat of PMC Bank like scams. The President of India will promulgate an ordinance to this effect, Information and Broadcasting Minister Prakash Javadekar told reporters after the meeting of the Union Cabinet.
A bench comprising Chief Justice S A Bobe and justices B R Gavai and Surya Kant took note of the submissions of solicitor general Tushar Mehta that the high court order, to the extent of allowing their release from prison, needed to be stayed.
In the aftermath of the PMC Bank mess which was in the RBI's highest rating of 'A' category, trustworthiness of these ratings may be up for a review.
With this relaxation more than 77 per cent of the depositors will be able to withdraw their entire account balance.
The Reserve Bank on Friday superseded the board of the city-based Abhyudaya Cooperative Bank on concerns emanating from "poor governance" and appointed an administrator to manage the affairs of the lender. In what can be seen as a step that should allay depositors' concerns, the central bank did not put any restrictions or moratorium on deposit withdrawals because of the comfort it gets on the bank's finances, according to people in the know. "(The) action is necessitated due to certain material concerns emanating from poor governance standards observed in the bank.
Parliament on Tuesday passed amendments to the Banking Regulation Act to bring cooperative banks under the supervision of the RBI, a move aimed at protecting the interest of depositors.
The attachment is linked to a money laundering probe linked to a Rs 1,034 crore worth land 'scam' related to the re-development of a 'chawl' in Mumbai.
Do not go for riskier options like co-operative bank only for the higher return. Even if you go for them, park only a small portion of your capital there, say Tinesh Bhasin and Sanjay Kumar Singh.
The plea, filed by Delhi-based Bejon Kumar Misra, said the Centre and RBI should be directed to ensure complete insulation and insurance of the hard-earned deposited money of people in various co-operative banks, including nationalised banks, by enacting an appropriate measure of 100 per cent insurance coverage towards the deposited amount.
Only when we are part of the same family, which will happen down the line, then, of course, we will give them (PMC depositors) all the assurance and the comfort.'
Analysts say that PMC Bank case is only going to make matters worse for HDIL and the Wadhawans.
The interest offered is mostly 0.5 to 1 per cent more than what other banks offer. Moreover, customer service and long-term association spanning generations are also other reasons for the popularity.
Such minutes will be available within two weeks from the date of its confirmation in the next meeting of the central board and on being signed by the chairman in the same meeting, the RBI said in a statement on its website.
Rakesh Wadhawan and his son Sarang Wadhawan, accused of loan default, have been arrested by the Economic Offences Wing.
At present, bank depositors get an insurance cover of Rs 1 lakh on their amount by the Deposit Insurance and credit Guarantee Corporation.
"Every time we cut trees, we plant more. It is a rule of the forest department," Javadekar said.
The decision assumes significance in the wake of a scam in the PMC Bank affecting lakhs of customers who are facing difficulties in withdrawing their money due to restrictions imposed by the Reserve Bank of India.
According to the Trends and Progress Report of the RBI, 98 per cent of frauds in terms of value were related to loans, and their occurrence was spread over several previous years.
The ED summoned Varsha Raut for questioning in the PMC Bank money laundering case on December 29, officials had said on Sunday.
ED has come across two immovable assets - one flat in Dubai and one land parcel in London. It is examining the valuation of both properties, estimated between Rs 150 crore and Rs 200 crore.
The Deposit Insurance and Credit Guarantee Corporation (DICGC) will pay the depositors of 21 stressed cooperative banks, including the Punjab & Maharashtra Co-Operative Bank (PMC Bank), up to Rs 5 lakh within 90 days. The Reserve Bank of India (RBI) had imposed restrictions on the withdrawal of deposits from these banks. Of the 21 banks, 11 are from Maharashtra, five from Karnataka, and one each from Uttar Pradesh, Kerala, Rajasthan, Madhya Pradesh, and Punjab.
One incident should not be used to generalise the health of all cooperative banks, says RBI governor Shaktikanta Das.
Gathering of five or more people at public places is prohibited, but there are no restrictions on people stepping out for the purpose of buying medicines, and visiting friends and relatives (after 11 pm in view of the night curfew).
While the collapse of a large financial intermediary can wreak havoc on the system because of the interconnectivity, a large business conglomerate too can play spoilsport if the banks have too much exposure to the entity, explains Tamal Bandyopadhyay.
In its EoI document, the bank had said it was open to converting into a small finance bank.
The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender. For the next month, Yes Bank will led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
Kumar said the Commission will follow the time-tested methods of consultations and consensus building in bringing about any reforms and will not shy away from tough decisions, according to an Election Commission (EC) statement.
The government would be ironing out issues related to the controversial 'bail-in' clause in the earlier Bill, explore hiking the deposit insurance cover of customers, and decide whether the resolution framework should apply to public sector banks.
As the fire at a Bhandup mall which claimed the lives of nine COVID-19 patients admitted at the hospital in the same building was finally doused on Saturday, a case has been registered against HDIL promoter Rakesh Wadhawan and five others for 'culpable homicide'.
At the press interaction, Sitharaman said secretaries from the department of financial services and economic affairs will be meeting a deputy governor of RBI soon to look into the "shortcomings" of the functioning of multi-state cooperative banks and see if any amendments can be made to the laws.
The Enforcement Directorate (ED) has issued fresh summons to Shiv Sena MP Sanjay Raut asking him to appear on July 1 for questioning in a money laundering case linked to the re-development of a Mumbai 'chawl' and other related financial transactions involving his wife and friends, officials said.
The two central premier investigative agencies - Central Bureau of Investigation and Enforcement Directorate - have asked their officials to focus more on digital evidence, e-forums and social media to crack down on offenders. These are a crucial part of prosecution amid the second wave of the pandemic. The Income Tax Department is going full throttle on data analytics to issue notices in time-bound cases. Further, sleuths have been given electronic devices including laptops with secure connections, which keep data encrypted and inaccessible.
Tamal Bandyopadhyay, columnist and author of several books like From Lehman to Demonetisation: A Decade of Disruptions and Sahara: The Untold Story, tells Rediff.com why Yes Bank depositors should not panic and the current crisis at India's fifth largest private lender does not pose any systemic risk.
The Reserve Bank on Monday superseded the boards of Srei Infrastructure Finance as well as Srei Equipment Finance, citing concerns over governance and payment defaults, and decided to refer the two NBFCs for resolution under the insolvency law. This is only the second time in as many years that the Reserve Bank of India (RBI) is referring entities for the resolution process under the Insolvency and Bankruptcy Code (IBC) after taking first ever such step in the case of DHFL back in 2019. Superseding the boards of the crisis-hit Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL), the RBI has appointed Rajneesh Sharma, former Chief General Manager of Bank of Baroda as the administrator to manage the affairs of the two companies.
Two of the depositors had died of cardiac arrest, while another, a woman doctor, allegedly committed suicide.
"It is a stable government and it will continue," Pawar said.
'The government in the past has also increased (the limit) from Rs 2.5 lakh to Rs 5 lakh. In future, whenever the time arises, we will look into the matter.'
Sitharaman said economic slowdown seems to have bottomed out and the coming festive season will help the economy start looking up.
'Of the 202 debates, 79 were around attacking Pakistan and 66 attacking the Opposition and Nehru.' 'The PMC Bank scam where thousands of depositors lost their savings got just one,' points out Vanita Kohli-Khandekar.
The financial sector has been deeply troubled since 2013. It is now in a full-blown crisis, warns Devangshu Datta.
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