LATEST RBI GUIDELINES FOR MULTI-STATE CREDIT COOPERATIVE SOCIETY
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Multistate cooperative societies are governed by the Reserve Bank and registered by the State Cooperative Societies Act of the relevant State. The 2020 amendment replaced Section 12 with language that addressed cooperative banks' ability to issue and control securities. According to the 2022 announcement, UCBs may issue equity shares, preference shares, or debt instruments as three general ways to generate capital.
GUIDELINESGUIDELINES-
India's multi-state cooperative society system is primarily responsible for ensuring credit flow to the agricultural sector. Both short-term and longterm suitable credit systems are included in it. Primary Agricultural Credit Societies (PACS) at the village level, Central Cooperative Banks (CCBs) at the district level, and State Cooperative Banks (StCBs) at the state level make up the three tiers of the short-term cooperative credit framework.
PACS are not governed by the Reserve Bank of India because they fall beyond the scope of the Banking Regulation Act, of 1949. CBS/DCCBs are governed by the Reserve Bank and registered by the State Cooperative Societies Act of the relevant State.
Primary Cooperative Banks (PCBs), sometimes known as Urban Cooperative Banks (UCBs), serves clients in urban and semi-urban regions that have financial needs. To operate outside of a single state, UCBs must first be established as cooperative societies under the rules of either the State Cooperative Societies Act of the relevant State or the Multi-State Cooperative Societies Act, of 2002. The banks are disproportionally scattered over the globe, making the sector diverse. Some of them are substantial and operate in multiple states, even though many of them are unit banks with no branch network.
Incorporation, regulation, and winding up of cooperative societies are subject to state law and are governed by state legislation on cooperative societies. This excludes cooperative societies that operate in multiple states. The Multi-State Cooperative Societies Act, of 2002 governs the establishment, regulation, and winding up of cooperatives whose purposes are not limited to a single State. These cooperatives fall under this act's purview. The State Government and the Registrar of Co-operative Societies, who the State selects, are the primary regulating authority for the cooperative societies because the vast majority of co-operative societies only operate in one State.
As these provisions are meant for the proper regulation of the business of banking and not in respect of their constitution as such, it would be essential to have a more or less uniform regulatory regime for all types of banks regardless of their constitution as a company, cooperative society, or statutory corporation. Any management regulation must be viewed as incidental to the primary regulatory requirements on banking and hence justifiable even if it affects the topic of regulation of cooperatives, which is a State matter, insofar as it is necessary for proper management of the business of banking.
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