New India, old problems

RBI should initiate an asset quality review of all co-operative banks

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More than five years after the Punjab and Maharashtra Co-operative (PMC) Bank was declared insolvent and operations were suspended, the Reserve Bank of India (RBI) has superseded the board of New India Co-operative Bank for a period of 12 months.

Despite the collapse of so many lenders in the past—both scheduled commercial banks and co-operative banks—no lessons appear to have been learnt.

Once again, depositors have been left in the lurch; they cannot withdraw their money for six months.

The bank's business has come to a standstill because it can neither give loans nor accept deposits.

While urban and multi-state co-operative banks are now under the supervision of the RBI after the amendment to the Banking Regulation Act, 1949, it's not clear why there has been no comprehensive review of the way co-operative banks function.