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Wednesday, February 1, 2023

RBI moves to Supreme Court to consolidate cooperative bank pleas

The Supreme Court of India went over Reserve Bank of India’s petition reluctantly in which the country’s core bank has seek consolidation of the score of pleas that have been filed by cooperative banks in a number of High Courts, challenging the Banking Regulation Act to appoint a board of committee, including CEOs and MDs.

Senior advocate Rakesh Dwivedi who has been appearing as the lawyer of RBI instructed a bench of Chief Justice N V Ramana and Justice Hima Kohli that the BR Act is necessary since most of the fraudulent activities in cooperative banks take place due to illicit management that occur between the bank’s members and fraudsters.

He also mentioned that the prime reason for arranging cooperative banks is to provide necessary funding to the country’s agriculturists and farmers. With the banks having Rs 5 lakh crore deposits without the RBI monitoring the appointment of the banks’ administration, the country’s rural financial state can face potential damage.

The bench however decided that they will not be taking any decision before the HCs go through the pleas. Liz Mathew, member of RBI counsel said, “In an overwhelmingly large number of such cases where the Urban Cooperative Banks (UCBs) are in financial difficulties, the primary reason is managerial failure either due to incompetence or complicity on account of vested interests.”

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