To provide benefit to the small depositors, the government has now decided to ramp up its strategy to bring urban as well as multi-state co-operative banks under regulations of the Reserve Bank of India.
Prakash Javadekar Information and Broadcasting Minister briefed the media after the cabinet meeting and told that there are about 1,540 urban cooperative and multi-state co-operative banks with 8.60 crore depositors, with total savings of a sum of Rs5 lakh crore. “Depositors will feel a lot safer after this move,” the minister stated.
Under the Mudra(Sishu) scheme, the cabinet approved a proposal for expansion of interest subsidy of 2% for 12 months through May 31, 2021, to small-scale entrepreneurs in the unprotected sections of the society and will cost the government an amount of Rs1,542 crore.
According to this scheme, a Sishu loan is categorized as a loan for income-generating activities of a maximum of Rs50,000. Although, NPA account holders cannot avail of this subsidy. The Sishu category had recorded about 9.37 crore loan accounts with an outstanding amount of around Rs1.62 lakh crore as of March 31.
“The interest subvention would be payable for months in which accounts are not in the NPA category, including for the months when the accounts become performing assets again, after turning NPA. The scheme will incentivize people who will make regular repayments of loans,” the government said in a statement.
Concerning the mandate on the alteration to the Banking Regulation Act, it will add to the central bank’s capacity to manage these substances. In any case, authoritative issues keep on being guided by the Registrar of Cooperative.
Additionally, the move targets guaranteeing better administration and a legitimate guideline of cooperative banks with the goal that their undertakings are led straightforwardly, and contributors’ advantage is secured.
Nirmala Sitharaman introduced a bill for amendment the Banking Regulation Act for guaranteeing a hard and fast investigation of the undertakings of such co-operatives by the RBI, said the progression was very much required to maintain a strategic distance from PMC Bank-like crisis in the future.
Moreover, given the susceptibility over assembling Parliament meetings in midst of the outbreak, the administration likely idea is to acquire a mandate to actualize the arrangement desperately, a senior investor told FE.
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