Urban, multi-State cooperative banks to come under RBI supervision

News: The Central government has approved an Ordinance to bring all urban and multi-state co-operative banks under the direct supervision of the Reserve Bank of India(RBI).


  • Aim: To empower more security to depositors and to prevent instances of fraud and serious financial irregularities such as the major scam at Punjab and Maharashtra Co-operative(PMC) Bank in 2019.
  • How were they regulated earlier? Till now, the Urban co-operative banks came under dual regulation of the RBI and the Registrar of Co-operative Societies.
  • Significance: It will empower the RBI to regulate all urban and multi-state co-operative banks on the lines of commercial banks.
  • Concerns: The rural co-operative banks will continue to remain under the dual regulation.

Additional Facts:

  • Co-operative Banks: These are financial entities established on a co-operative basis and belonging to their members.This means that the customers of a co-operative bank are also its owners.
  • Regulation: Co-operative Banks are registered under the States Cooperative Societies Act.They also come under the regulatory ambit of the Reserve Bank of India(RBI) under two laws: Banking Regulations Act, 1949 and the Banking Laws (Co-operative Societies) Act,1955.