MUMBAI: A day after the state government appointed a 13-member committee headed by cooperation minister Balasaheb Patil to study the impact of the amendment to the Banking Regulation Act on urban cooperative banks in the state, the panel, in its first meeting itself, decided to challenge the amendment in court.
“We fear the urban cooperative banking sector will collapse following the amendment to the Banking Regulation Act,” Patil told TOI.
“We have decided to challenge it in court.
Whether to move the high court or Supreme Court will be decided after seeking legal opinion of the advocate general.” A fortnight ago, NCP president Sharad Pawar had asked the state government to study the adverse impact of the amendment on urban cooperative banks in the state.
Revenue minister Balasaheb Thorat, minister of state Vishwajeet Kadam, rural development minister Hasan Mushrif, MSC Bank administrator Vidyadhar Anaskar, and banking expert Vishwas Thakur were present in the meeting.
Ansakar made a comprehensive presentation on the pros and cons of the amendment.
As per the presentation, the amendment gives massive powers to the RBI for regulating urban cooperative banks, which have been directly or indirectly controlled by the NCP and Congress.
Now, the NDA government has decided to regulate recruitments, including the appointment of MDs, their salaries and eligibility, the RBI will decide the eligibility of 50% of the directors and the director’s tenure will not extend beyond eight years.
The amendment also aprovides for removal of directors who do not confirm to RBI norms and those removed will not be eligible for appointment on any bank in any capacity.
The new chairman will be appointed with RBI permission.
The panel was informed that two Tamil Nadu-based urban cooperative banks have challenged the amendment before the Madras high court.
The petitions were to be heard on December 3, 2020, but owing to the pandemic situation, there was no hearing.
The contention of most of the members was that it was beyond the jurisdiction of the RBI to interfere in the non-banking activities of urban cooperative banks.
“If we are changing the location of the bank, why should the RBI examine our decision,” a senior cabinet member said.
Thorat said it appears that the RBI amended the law to end the urban cooperative network in the state.
“Our cooperative banks are the backbone of the rural economy, now the RBI aims at destroying it.
We will oppose the amendment,” he said.