Union Minister Prakash Javadekar, in a virtual press conference announced on Wednesay 24 June that the Union Cabinet has passed an ordinance to bring all Urban cooperative banks under the Reserve Bank of India.

Earlier the Union Cabinet had amended the Banking Regulation Act to bring cooperative banks under the control of the central bank, in light of the Punjab and Maharashtra Cooperative (PMC) Banks debacle in 2019.  This fiasco had created a substantial unease in the minds of depositors with cooperative banks.

The minister, in his address to the media said that nearly 9 crore depositors with 1,500 urban cooperative banks amounting to nearly Rs 4.84 lakh crore in deposits will stay safe after the banks come under the control of the Reserve Bank of India, immediately once the President signs the ordinance.

Udaipur Times spoke to the Chairman and Chief Executive Officer of The Udaipur Urban Cooperative Bank Ltd, and this is what they had to say:

"With the PMC Bank fiasco last year, customers of most cooperative banks have been concerned. With this ordinance, once implemented, at one end the customers will stay safe and on the other hand, we as local cooperative banks will be able to manage smaller clients especially traders, smaller MSMEs in a better manner. Corporate governance will be enhanced  It is expected that UCBs will also be permitted to participate in the central government promoted lending schemes, which were till now restricted to scheduled banks - especially in the light of the post COVID lockdown situation as we have a better understanding of the local traders and MSME market." - Fida Husain Safy, Chairman, The Udaipur Urban Cooperative Bank Ltd, Udaipur

"It has been quite a few months since the Reserve Bank of India has begun to send us instructions on managing our loan books in terms of exposures as well as priority sector lending.  The dual regulatory model will continue, with the Cooperative society continuing to monitor and guide us on administrative aspects and the Reserve Bank augmenting our banking practices through its complete control now. Though customers continue to maintain their faith in us, we are hopeful that with this ordinance we will be able to further that faith and support our customers with more value added services." - Qutbuddin Shaikh, CEO, The Udaipur Urban Cooperative Bank Ltd, Udaipur