The Union Cabinet has approved amendments to the Banking Regulation Act to empower the Reserve Bank of India to regulate co-operative banks as the government was looking to tighten scrutiny around co-operative banks after the collapse of Punjab and Maharashtra Co-operative (PMC) Bank.

The provisions would give the banking regulator the power to supersede and take control of weak co-operative banks.

Under the new proposals, the co-operative banks will be required to seek RBI nod before the appointment of CEO. The banks will also carry out audits as per RBI guidelines.

CNBC-TV18 reported in November 2019 that the government was working on draft legislation to bring urban co-operative banks under the RBI. The government’s key worry is the “loose regulation” of urban cooperative banks as they fall under a multi regulatory regime of RBI, Registrar of Societies and state governments, reported CNBC-TV18, citing sources.

First Published:Feb 5, 2020 1:47 PM IST