Reserve Bank of India (RBI) Governor Shaktikanta Das on Sunday indicated that the banking regulator will make sweeping regulatory changes to reform urban co-operative banks, which have been plagued by failures, and allow people to park their savings in banks’ offer. warned against. high returns.
As a ‘landmark’ development of the government’s decision to increase the insured limit from ₹1 lakh to ₹5 lakh for bank deposits paying such deposits, Mr. Das insisted that payment of deposit insurance Should be seen as a ‘measure of last resort’.
“I would like to mention in all this that the depositors should also be very sensible. It is very important to note that higher returns are usually associated with higher risk. Just because a bank is offering higher interest, the depositors should be very careful in investing their money chasing such high returns,” the RBI governor said.
“I am not making generalisations. There are institutions that are offering high interest rates which are viable, but depositors should always be very careful,” he said, marking the payment of around ₹1,300 crore to over 1 lakh depositors. whose funds were stuck in troubled banks for years. ,
Prime Minister Narendra Modi, who personally handed over deposit insurance checks to some bank customers whose savings with troubled banks had been out of reach for years, said an additional three lakh depositors would get their hard-earned money, stuck in other banks, soon.
“When RBI will oversee the working of cooperative banks, it will boost the confidence of the depositors even more. We have created a new Ministry of Co-operatives (referring to Ministry of Co-operatives). The idea is to strengthen the cooperative system and make cooperative banks more empowered,” Mr Modi said, noting that these problems have affected cooperative banks more.
Mr Das said the central bank puts the interests of depositors on top while dealing with policy challenges and will continue to ensure that the entire banking system remains strong.
“Just to give an example, we have come up with new governance guidelines for commercial banks and we have constituted a committee to bring reforms in the urban cooperative sector. That report has been received and we will take action based on it.
Recalling his time as the Chief Minister of Gujarat, Mr Modi said that he had urged the central government at that time to increase deposit insurance from ₹1 lakh to ₹5 lakh for bank account holders, but the poor and middle class. called upon them for their protection. Depositors’ money in failed banks was ignored.
Mr. Modi took over as chief minister of Gujarat in October 2001, months after the Madhavpura Mercantile Co-operative Bank plunged into trouble, leaving its depositors in tatters.
“I clearly remember when I was the CM and a bank faced problem, people used to hold our neck. The decision either had to be taken by the Indian government or the banks, but the chief ministers had to face the heat,” he said.
“Their pain was natural and at that time, I had repeatedly requested the Government of India to increase the deposit sum insured from ₹1 lakh to ₹5 lakh so that maximum families would be satisfied. But my suggestion was ignored. He didn’t. Then, the people did what they had to do and sent me here,” he said, describing his election victory in the Lok Sabha, referring to the anger of the poor, lower middle class and middle class people of the society who were “victims and people”. Tolerated it for decades.
“When the banks got sunk due to wrong policies of some people, they not only lost their savings but in a way their whole life got stuck and they started feeling dark. It took years for people to withdraw their money and the problems in cooperative banks were even greater,” the prime minister said.
Union Finance Minister Nirmala Sitharaman, who spoke after the RBI governor and before the prime minister, also tried to emphasize that the government’s approach has been sensitive to the needs of the middle class.
While the laws generally come into force from the date they are passed and notified by Parliament, Ms Sitharaman said the government has made an exception by amending the relevant deposit insurance laws.
“Here, we saw that some banks were waiting for a solution for years and the depositors in those banks were also not getting relief. So exceptionally, this time, we have implemented it retrospectively, so that people who have been waiting for five-six years also get some relief. So the customer has been kept in mind, the hard-earned middle class has been kept in mind,” she said.