Guidelines for Co-operative banks from The Reserve Bank of India seem to have upset the Kerala government on issues pertaining to Banking Regulation Amendment Act 2021, which was passed by the parliament. On the center of the row lie the two principal guidelines from the RBI that direct co-operative societies to stop the usage of the term – ‘cooperative bank’.
Along with prohibiting co-operatives from taking deposits from non-voting members. While the Kerala government is unhappy with the Reserve Bank of India guidelines. The regulatory orders on primary co-operative societies and co-operative banks have been strongly opposed by the RBI to the extent that the matter is thought to be taken to the Supreme Court for proper resolution.
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As per the directives of the new RBI guidelines, the management of around 1,625 primary co-operative societies & thousands of many other co-operative banks will be adversely affected.
This being the primary reason as to why the Kerala Government is opposed to the Reserve Bank of India guidelines. Kerala Finance Minister Balagopal is in talks & discussions with the Advocate General over the matter and to decide the further course of legal action that is to be taken.
As per the RBI, the guidelines are formed and implemented in accordance with the Banking Regulation Amendment Act, that were recently passed by the Parliament in its monsoon session i.e in September. The Center, however, feels that the act is not being properly implemented in Kerala alone.
On the contrary, Kerala Co-operation Minister VN Vasavan has accused the center for passing laws that have been politically motivated with a purpose, and with the enforcement of such laws, the center clearly wants to hamper the smooth working of more than 60 percent of the co-operative societies.
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