- The rural co-operative credit system in India should be mandated to check the flow of credit to the agriculture sector. This system was classified into as – short term and long term co-operative credit structures. The short-term co-operative structures were classified into primary agricultural credit societies at the village level, central co-operative banks at the district level, state co-operative banks at the state level.
- The primary agricultural credit societies were outside the purview of the banking regulation act, 1949 and hence it should not be regulated by the Reserve Bank of India. The state co-operative banks were registered under the provisions of state co-operative societies act of the concerned state and regulated by the RBI. A power was given to the National Bank for Agricultural and Rural Development (NABARD) under sec 35 A of the banking regulation act 1949 for the purpose of inspecting state and central cooperative banks.
- The primary co-operative banks which were also known as urban co-operative banks would provide the financial needs of the customers in urban and semi-urban level areas. Mostly urban co-operative banks were registered as co-operative societies under the provisions of either state co-operative societies act of the concerned state or multi-state co-operative societies act 2002 if the area of the operations of the banks was extended beyond the boundaries of one state.
- Here, even though co-operative societies were regulated by the banking regulation act 1949, but these societies were regulated by reserve bank for banking operations and management related functions were regulated by concerned state/central government. Under MoU arrangements, the RBI had constituted a state-level task force for co-operative urban banks for urban co-operative banks which was operated only in one state. The central task force for co-operative banks should be constituted for the multi-state urban co-operative banks. This task force for co-operative banks was identified the potentially viable and non-viable in the states and provided some revival path for the viable and non-disruptive exit route for the non-viable ones. The Department of co-operative bank regulation had regulated the state co-operative banks, district co-operative banks and urban co-operative banks.
Various Other Regulators of Banks in India.
Government as a Regulator:
- The central government, particularly the Ministry of Finance, had supervised and legislated the functions of banks and financial institutions. And also the government had monitored the banking operations, prescribed some norms for the operation and functioning of public sector banks and examined legislative measures for the recovery of banks debts and established some judicial mechanisms for this purposes.
- The various other was going to regulate the banks are as follows ---- National Bank for Agricultural and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI), National Housing Bank (NHB), Export-Import Bank of India (EXIM), Securities Exchange Board of India (SEBI), Insurance Regulatory Development Authority of India (IRDAI), etc.
- Nowadays, there are more developed in banking sector such as starting payment bank, small finance bank, etc. And also there are number of developments in regulation norms.
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