WhatsApp Image 2023-02-26 at 9.49.20 AM (1)
WhatsApp Image 2023-02-26 at 9.49.20 AM

Centre to cleanse cooperative societies

Kochi: Defrauders of gullible depositors in cooperative societies can no longer get away just like that as the central government has set up a dedicated ministry headed by Union Home Minister Amit Shah to discipline the Cooperative sector.

The RBI has been armed with more powers  by amending Banking Regulation Act after the Punjab Maharashtra Cooperative (PMC) Bank scam of 2019, media reports said.

The amendment is aimed at infusing professionalism, capital accessibility, better governance and ensuring sound banking, the reports said.

It was the Punjab Maharashtra Cooperative (PMC) Bank scam of 2019 that led to the empowerment of the RBI and formation of the Cooperation Ministry carved out from the Union Agriculture Ministry.

Amit Shah was chosen to lead from the front as he  is credited with helping the sick Congress ruled Ahmedabad District Cooperative Bank earn a profit of Rs 6 crore in just one year after he became its chairman in 2000, the reports said.

The multi-crore rupees PMC bank fraud happened due to the bank management allegedly helping Housing Development and Infrastructure Ltd (HDIL) founder Rakesh Wadhawan get huge money from the bank illegally and get involved in a money laundering case.

An ailing Wadhawan was arrested by the Enforcement Directorate in 2019 in the case that came to light when the RBI discovered that the bank had allegedly created fictitious accounts to hide over Rs 4,355 crore of loans given to HDIL.

As per the paper tabled in Parliament, Kerala had a share of 44 per cent in the frauds that happened in state cooperative banks in the country, while Maharashtra had 67 per cent in Urban Cooperative Banks (UCB) in the 2021 financial year.

However, frauds in UCB dropped considerably to 323 frauds in 2021 during the financial year against 568 in 2020 and 1,193 in 2019.

There was also a dip in frauds in State Cooperative Banks (SCB) to 482 in 2021 from 508 in 2020 in the country.

The gross bad loans of district central cooperative banks (DCCBs) were among the highest in the banking system at 12.6 per cent (Rs 35,298 crore) of their advances as of March 2020.

The gross non-performing assets (NPAs) of UCBs remained at 11.3 per cent (Rs 35,528 crore) at the end of March 2021. 

The gross NPAs of state cooperative banks were 6.7% (Rs 13,477 crore) as of March 2020.

There are 34 SCB, 351 DCCBs and 1,534 UCBs in the country.

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